The traditional underwater integrated navigation system is based on an optical fiber gyroscope and Doppler Velocity Log, which is high-precision but also expensive, heavy, bulky and difficult to adapt to the development requirements of AUV swarm, intelligence and miniaturization. This paper proposes a low-cost, light-weight, small-volume and low-computation underwater integrated navigation system based on MEMS IMU/DVL/USBL. First, according to the motion formula of AUV, a five-dimensional state equation of the system was established, whose dimension was far less than that of the traditional. Second, the main source of error was considered. As the velocity observation value of the system, the velocity measured by DVL eliminated the scale error and lever arm error. As the position observation value of the system, the position measured by USBL eliminated the lever arm error. Third, to solve the issue of inconsistent observation frequencies between DVL and USBL, a sequential filter was proposed to update the extended Kalman filter. Finally, through selecting the sensor equipment and conducting two lake experiments with total voyages of 5.02 km and 3.2 km, respectively, the correctness and practicality of the system were confirmed by the results. By comparing the output of the integrated navigation system and the data of RTK GPS, the average position error was 4.12 m, the maximum position error was 8.53 m, the average velocity error was 0.027 m/s and the average yaw error was 1.41°, whose precision is as high as that of an optical fiber gyroscope and Doppler Velocity Log integrated navigation system, but the price is less than half of that. The experimental results show that the proposed underwater integrated navigation system could realize the high-precision and long-term navigation of AUV in the designated area, which had great potential for both military and civilian applications.