Tool holders are one of the most important structures in transferring machine tools and energy for manufacturing in CNC lathe. Power servo tool holders influence kinematic accuracy and machining accuracy and so are vital to the transposition system. Reliability evaluation is also critical to guaranteeing and maintaining the accuracy of the transposition system. The first four statistical moments are derived to depict the transmission error and system characteristics. Considering the Edgeworth expansion with higher terms, reliability and reliability-based sensitivity evaluations using moments are proposed to assess system accuracy. Compared with different methods, the proposed method can represent higher statistical characteristics, helping to avoid underestimations of system reliability. Also, results calculated with the proposed method for the transposition system are in agreement with the results from the Monte Carlo simulation with 107 samples. The relative error of failure probability is 4.32%. Considering the plus–minus sign and values of results, reliability-based sensitivity represents the effects of the parameters’ dispersions on system reliability. The reliability-based sensitivity indices can be utilized to optimize the system structure and to improve system accuracy, which can increase the system reliability from 98.34% to 99.99% in the transposition system of the power servo tool holder.