Six degrees of freedom measurement systems are required in many fields: Precision machine control. precision assembly, vibration analysis, and so on. This paper presents a new six degrees of freedom measurement system utilizing typical features of a diffraction grating. It is composed of a laser source, three position sensitive detectors, a diffraction grating target, and several optical components. Six degrees of freedom displacement is calculated kinematically from the coordinates of diffracted rays on the detectors. Optical measurement error was caused by the fact that a laser source had a Gaussian intensity distribution. This error was analyzed and compensated using simple equations. The performance of the compensation equation was verified in the experiment. The experimental results showed that the compensation equation could reduce the optical measurement error remarkably and the error in six degrees of freedom measurement less than $pm$10$mu$m for translation and $pm$0.012$^{circ}$for rotation