Insect flight has gained wide interests in both biology and engineering communities in the past decades regarding its aerodynamics, sensing and flight control. However, studying insect flight experimentally remains a challenge in both freeflight and tethered-flight settings. In free flight experiments, due to highly unpredictable and fast flight behavior of flying insects, it is difficult to apply controlled sensory inputs to their flight system for system identification and modeling analyses. In tethered flight experiments, constrained whole body movement results in silenced proprioceptive feedback therefore breaks the flight control loop and does not reveal any flight dynamics. Therefore, this work aims to develop a novel insect tether system using magnetic levitation. Such a system magnetically fixes an insect in space but allows it to rotate freely about yaw axis with minimal interference from mechanical constraints. This paper presents the development, analysis and feedback control of this system and finally test its performance using a hawkmoth (Manduca Sexta). In addition, a system identification of the magnetic levitation system and detailed analysis in closed-loop stability and performance are provided. In the future, the insect tether system will be applied to study the insect flight aerodynamics, sensing and control.