Linear displacement accuracy is one of the most important factors that determine machine tool accuracy The laser interferometer has been usually recommended for the measurement of linear displacement accuracy. In this paper, microcomputer aided measurement and compensation system has been developed for the pitch error in a CNC machine tool. For accurate pitch error calculation. the analysis code for the pitch error has been also implemented according to the international standards (ISO). The PC based automatic compensation system for the pitch error is also implemented. A new algorithm for calculating optimum value for pitch error compensation is proposed, minimizing the deviation at each target points. The development system has been applied to a practical CNC maching center and the performance has been demonstrated.