A photoelectric encoder measurement system was designed to achieve dynamic encoder measurement and improve the efficiency of the measurement in mass production. Firstly, error sources of photoelectric encoders were analyzed, and their features were recognized. Secondly, based on the feature, encoder measurement was accomplished by adopting differential method, and the detection system was designed by software and hardware. Lastly, experiments were conducted to verify the system. The results showed that the system is capable to detect encoder errors at speeds ranging 0-8 r/s, and the results are straightforward, accurate, and swift, which highly improve the efficiency of encoder measurement.