In this paper, we present spectral Galerkin approximation and rigorous error analysis for the Steklov eigenvalue problem in a circular domain. First of all, we use the polar coordinate transformation and technique of separation of variables to reduce the problem to a sequence of equivalent 1-dimensional eigenvalue problems that can be solved individually in parallel. Then, we derive the pole conditions and introduce weighted Sobolev space according to pole conditions. Together with the approximate properties of orthogonal polynomials, we prove the error estimates of approximate eigenvalues for each 1-dimensional eigenvalue problem. Finally, we provide some numerical experiments to validate the theoretical results and algorithms. KEYWORDS error estimation, circular domain, Steklov eigenvalue problem, spectral Galerkin approximation, weighted Soblev space 3764