Abbe error is the inherent systematic error in linear displacement measurement due to the measuring axis being out of line with the moving axis. The resulting gap is called the Abbe offset, which will multiply the angular pitch error of the moving stage to become the positioning error of the linear stage along the moving axis. Analogous to the Abbe principle, in the rotary stage, the rotary encoder is used to detect the worktable’s rotational angle. The encoder is normally mounted at a distance from the bearing. This distance can be also regarded as Abbe offset. Due to the inherent tilt and radial motions of the axis of rotation, the encoder’s rotating component, that is, the circular grating, would result in a lateral displacement relative to its sensing head that is fixed inside the stage housing. The actual measured angle is, therefore, different from the commanded angle, causing the angular positioning error of the rotary stage in machine tools and open-loop controlled system. In this article, the angular positioning error of the rotary stage caused by the tilt motion error and radial motion error of the spindle, the offset and the size of encoder is analyzed and experimentally verified.