Abstract: The location accuracy of overhead travelling crane is improved based on error compensation.To begin with analysis of error sources，as for main error source，the causality and effect have been analyzed.The error compensation methods corresponding to relevant main error sources have been discussed by different means.The error compensation algorithm that has been designed according to the research results have been applied to compensating location accuracy of overhead travelling crane.The simulation experiment validates that the algorithm is effective.Through a large number of on-site tests，the maximal error of actual position and ideal position is +2.6 cm，which well satisfies the need of production.