A new optical sensor system is presented that measures a reference vector direction relative to the body frame of a small unmanned aircraft system (sUAS) at medium ranges in daylight conditions with high precision and without drift using a low‐power, nonlaser, eye‐safe optical beacon. The beacon operates as a monochromatic, time‐modulated optical source, and the airborne sensor uses both optical band‐pass filtering and frequency domain signal processing to separate the beacon signal from reflected and scattered sunlight incident on the sensor's aperture, thus providing increased sensitivity. Characterization of the prototype sensor shows that the reference‐vector direction angles can be measured with an accuracy of better than 0.5% of the field of view, resulting in 0.1° accuracy over a 30 degree range, at a measurement update rate of 200 Hz. This result is based on an operating range of 134 m using a 1 W beacon with a 9° beamwidth. The prototype system was integrated into and tested on a small UAS. Flight test results are presented comparing the prototype sensor system's output to an estimate of the reference‐vector direction produced by fusing inertial measurement and GPS information, thus demonstrating how this sensor system offers a method of validating sUAS attitude estimation systems. The sensor system may also be used to augment sUAS attitude estimation systems, or for other purposes such as in a precision sUAS landing system or for state estimation in GPS‐denied environments.