This paper presents the analysis and design of a transformer position sensor for pneumatic cylinder considering te mperature stability. Two solenoid coils as excitation coil and pick up coil around cylinder are used for position transducer. The e ffe cts of temperature of aluminum cylinder and iron rod with different ferromagnetic materials on position sensor performance are analyzed and measured. We found that the effect of te mperature dependence of shell resistivity is dominant, while the e ffe ct of permeability change is negligible. Based on the simulations and measurement we suggest simple method of te mperature compensation.