Position error a laser illuminated object (target) is analyzed. The relations for the displacement signal and probability density function of displacement signal by laser illuminated object are given. The error of displacement signal and the position error are derived. The error of displacement signal of laser illuminated object versus to signal-to-noise ratio (SNR) and the mean value displacement signal. The error of displacement signal is inverse proportional to the root square signal-to-noise ratio, and increases with the mean value displacement signal. The minimum error of displacement signal is root square two times smaller than maximum value, for constant signal-to-noise ratio. The position error is proportional to the error of displacement signal.The minimum position error is obtained when the center of the spot is in the center of quadrant photodiode, and increases with jx0j/r, for constant SNR. The position error rapidly increases at the limits of the measurement range x0/r = ∓1.