We propose a taper thread compensation algorithm that considers the taper thread tilt state and tooth distortion to address the problem of low accuracy of taper thread inspection by machine vision. The analysis of the taper thread inspection process reveals the reason for the low accuracy of taper thread inspection, and the mathematical modeling of the taper thread is established according to the spatial geometric relationship. The experiment shows that the compensation rate of the algorithm is 80% of the base median, 70% of the thread half-angle, and 85% of the bottom width of the thread compared with that before the compensation, and it has less influence on the large diameter and pitch.