Abstract: A new method and apparatus is proposed to improve the precision and reduce the cost of photoelectric encoder measurements.The method is based on highest resolution measurement and completely statistical analysis.The system includes a stepping motor,a high precision worm reduction gear,a high speed single chip microcomputer,a low cost incremental optical electric encoder and some multi interfaces of communication protocols.The single chip microcomputer as the lower system can test and collect the optical electric encoder.The PC computer as host-computer can deal with the test data.The precision of the system can reach 18 binary digits.Results of application in practice showed that the method and apparatus is efficient and effective,the cost of the apparatus is less than the some kind of system.