Abstract: A simplified mechanism for rotationally aligning and gapping a pattern wheel with respect to a stationary mask are provided as part of a modular optical shaft encoder in accordance with the present invention. Moreover, the present invention includes a simplified method of connecting and aligning a modular encoder to a shaft. A radial alignment mechanism is provided between engagement surfaces of the hub of the pattern wheel and the encoder housing for independently providing radial alignment. The engagement surfaces are designed so that as the surfaces are urged into engagement with one another, the encoder housing (and thus the mask pattern) becomes radially aligned to the pattern wheel (and specifically its pattern). As an independent functional mechanism, a linear cam member is utilized for gapping the hub of the pattern wheel and thus the pattern thereon to the stationary mask pattern.