In this paper, a novel lattice model on a single-lane gradient road is proposed with the consideration of relative current. The stability condition is obtained by using linear stability theory. It is shown that the stability of traffic flow on the gradient road varies with the slope and the sensitivity of response to the relative current: when the slope is constant, the stable region increases with the increasing of the sensitivity of response to the relative current; when the sensitivity of response to the relative current is constant, the stable region increases with the increasing of the slope in uphill and decreases with the increasing of the slope in downhill. A series of numerical simulations show a good agreement with the analytical result and show that the sensitivity of response to the relative current is better than the slope in stabilizing traffic flow and suppressing traffic congestion. By using nonlinear analysis, the Burgers, Korteweg–de Vries (KdV), and modified Korteweg–de Vries (mKdV) equations are derived to describe the triangular shock waves, soliton waves, and kink–antikink waves in the stable, metastable, and unstable region, respectively, which can explain the phase transitions from free traffic to stop-and-go traffic, and finally to congested traffic. One conclusion is drawn that the traffic congestion on the gradient road can be suppressed efficiently by introducing the relative velocity.