The paper explains an auto-read photoelectric autocollimator based on DSP and area array imaging sensors. The working principles, hardware and software of the design is interpreted. This equipment is able to conduct precise two-dimensional measurement. The embedded core Blackfin DSP BF549 is used in the device to acquire consecutive video, help store them and process the image datas. TFT screen is adopted to display the processed video results at real time. Auto-read tracking algorithm is a combined method of image interframe difference and background difference. Thus the moving target is detected in the static background. Then according to the position of the moving measuring mark calculate the angular displacement.