According to forming principle of line contact spherical generating by cup-shaped wheel, the sources of grinding error were analyzed, and a new method for error analysis and compensation was proposed in this paper. In a certain grinding condition, the grinding error caused by the pose errors between wheel and workpiece was simulated, the corresponding curve fitting of grinding error was carried out, and an appropriate parametric model was established. If the actual grinding error is known, the model can identify the corresponding pose error as well as compensate the grinding error. The simulation and experiment processes of compensation validate the efficient and workability of parametric model, and improve the grinding precision.