Optical encoders are widely used in applications requiring precise displacement measurement and fluent motion control. To reach high positioning accuracy and repeatability, and to create a more stable speed-control loop, essential attention must be directed to the subdivisional error (SDE) of the used encoder. This error influences the interpolation process and restricts the ability to achieve a high resolution. The SDE could be caused by various factors, such as the particular design of the reading head and the optical scanning principle, quality of the measuring scale, any kind of relative orientation changes between the optical components caused by mechanical vibrations or deformations, or scanning speed. If the distorted analog signals are not corrected before interpolation, it is very important to know the limitations of the used encoder. The methodology described in this paper could be used to determine the magnitude of an SDE and its trend. This method is based on a constant-speed test and does not require high-accuracy reference. The performed experimental investigation of the standard optical linear encoder SDE under different scanning speeds revealed the linear relationship between the tested encoder’s traversing velocity and the error value. A more detailed investigation of the obtained results was done on the basis of fast Fourier transformation (FFT) to understand the physical nature of the SDE, and to consider how to improve the performance of the encoder.