Operating principle of laser beam-riding guidance was set forth. Based on the principle of spatial frequency-encoding, an optimum laser encoding mode was designed, which can transfer continuous laser into pulse laser that represents different position information. Then the mathematic model of deviation from target is built, a modified encoding pattern was presented, which is composed of two light paths crossed 90. Azimuth information of target is given in orthogonal coordinate system and deviation from target is linearity. As well as, characteristic distribution of spatial laser field is analyzed. Corresponding decoding mode was presented, by testing in 2 kilometers outdoor; experimental results demonstrated that the receiver can receive correctly the encoded signal and can decode the signal, measurement for the missdistance is feasible and all the performance parameters satisfy the demand.