Abstract: A dynamic measurement system of small absolute photoelectric encoder has been designed in this paper to overcome the defects of traditional measurement system in high cost, complex measurement process, insufficient testing points, and low precision of manual manipulation and unfeasibility of dynamic detecting characteristics. This system has conducted a further research and measurement in dynamic error of small absolute photoelectric encoder. Firstly, based on the comparison of the domestic and foreign traditional error detection method, a kind of simple and practicable dynamic detection method has been proposed. Secondly, photoelectric encoder dynamic measurement equipment has been set up and the key technology has been designed in this paper. Lastly, the testing of this equipment has been completed by detecting an encoder. The precision of equipment is 1.22" for no more than 16 binary bits when working at speed of 0~90 r/min. The measurement equipment possesses many advantages, such as low-cost, convenience, diversification, speediness and full automation which provides strong support for the dynamic measurement of small absolute photoelectric encoder.