The long period error and short period error of the inductosyn have been studied. And the study result is that the long period error mainly includes the first order error and secondary error in the period of 360°and the short period error mainly includes first order, secondary, third, fifth harmonic error, and so on. A novel model of error separation and compensation is firstly presented according to the error characteristic of inductosyn. And the fourier transform are compared with least-squares in many aspects, The implement method of the error separation based on least-squares is also discussed in detail. One new measuring method is proposed, which can use less than test position to attain the long period error and the short period error. The experiments show that the error compensation method can improve the precision of the inductosyn.