This study proposes a 2D contour measurement system at the tool center point (TCP) that consists of a Blu-ray pickup head and position sensitive detector (PSD). The TCP displacement is equivalent to the relative position between the tool and workpiece. When the machine tools operate the machine part along the desired contour, the TCP displacement affects the machining geometric accuracy. To evaluate the TCP displacement, the contour errors are measured by the cross-grid encoder (KGM) in practice. However, it is difficult to install KGM as it is large and expensive. In this study, an optical measurement system (OMS) is constructed to measure the TCP displacement, named TCP-OMS. A Blu-ray pickup head was installed on the spindle as a tool, and a PSD was installed on the table as a workpiece. To enhance the measurement signal’s resolution and precision of TCP-OMS, the noise was reduced by an AC voltage stabilizer, a DC regulator, and a low-pass filter. The experimental results show that the resolution of displacement measurement was less than 1 , and the linearity regions of the X-orientation and Y-orientation were ±3 . The motion test on the circular paths were performed on an actual machine tool, and the repeatability tests of this measurement system were verified. The measurement data of circular paths were collected by TCP-OMS and KGM and the results were then compared. When the feed rate of the circular paths increased, the circular deviations were magnified, simultaneously. The axis reversal spikes were observed at the quadrants of a circular path. These measurement results of TCP-OMS matched with the measurement results of KGM. The TCP-OMS developed in this study is characterized by simple installation, compactness, and a low price. It is suitable for 2D contour measurement at the tool center point of machine tools.