This article presents an application specific integrated circuit (ASIC) for inductive angular sensing systems, integrating analog‐to‐digital converters (ADCs), digital signal processing (DSP) circuits, and a RISC‐V core on‐chip. The chip, fabricated in a 0.11‐μm CMOS process, is capable of real‐time error correction and angle encoding in response to nonideal factors such as offset, nonlinearity, and noise in the system's sensing signals. This integrated encoding solution could effectively address the issues of large system volume, saving hardware resources while achieving high precision angular measurement. A rotary encoder was additionally developed, utilizing a compact printed circuit board (PCB), which integrates the proposed ASIC, sensing front‐end circuits, and inductive coils. When the on‐chip real‐time correction is enabled, the resolution of the encoder is improved from 0.3516° to 0.0054°, and the nonlinearity error in the 360° range is reduced from 0.5507° to 0.0320°. Besides, the nonlinear error has decreased by more than 90% at different rotation speeds.