The rotor vector (RV) gear reducer is a mechanism used for motion and torque transmission. With characteristics similar to a traditional cycloidal gear drive, it has been popularly applied in precision machinery because of its high-speed reduction ratio, large torque capacity, and high efficiency. In this work, we aim to analyze the kinematic error (transmission error) of the RV reducer with manufacturing and/or assembly tolerances. Formulae for the kinematic error are established by using the theory of gearing as well as tooth contact analysis. Subsequently, sensitivities of the kinematic error with respect to various design parameters are investigated. Lastly, a process to simulate the distribution of maximum kinematic errors of the gear reducer with various tolerance grades of the parts is developed via Monte Carlo method. It is shown that through selected tolerance control on the machine parts, the accuracy of the gear drive can be retained. The results of this work can be useful for controlling the manufacturing precision on the machine parts and assessing the overall accuracy of the mechanism in the design phase.