Abstract: Machine tools can be accurately measured and positioned on manufacturing machines within very small tolerances by use of an autocollimator on a 3-axis mount on a manufacturing machine and positioned so as to focus on a reference tooling ball or a machine tool, a digital camera connected to the viewing end of the autocollimator, and a marker and measure generator for receiving digital images from the camera, then displaying or measuring distances between the projection reticle and the reference reticle on the monitoring screen, and relating the distances to the actual position of the autocollimator relative to the reference tooling ball. The images and measurements are used to set the position of the machine tool and to measure the size and shape of the machine tool tip, and examine cutting edge wear.