In this paper, as the active position measurement system, a novel method for a two-dimensional localization system using M-sequence signal is proposed. The feature of this system is to realize a position measurement only by scanning the encoded laser beams from fixing points to a measurement field, and by observing it. First, both the system configuration and encoding method were practically considered, and an order and an initial value of M-sequence signal were selected for encoding. This method is based on discrete angle measurement therefore the resolution has its own limitation. To overcome this limitation, analogue phase shift detecting method was introduced. System design was performed and applied to position measurement experiments. The experimental results show that the measurement error of the analogue method is 1/3 of that of the discrete method. In this paper, as the active position measurement system, a novel method for a two-dimensional localization system using M-sequence signal is proposed. The feature of this system is to realize a position measurement only by scanning the encoded laser beams from the fixing points to a measurement field, and by observing it. First, both the system configuration and encoding method were practically considered, and an order and an initial value of M-sequence signal were selected for encoding. This method is based on discrete angle measurement therefore the resolution has its own limitation. To overcome this limitation, analogue phase shift detection method was introduced. The experimental results show that the measurement error of the analogue method is 1/3 of that of the discrete method.