Abstract: An optical encoder comprising a light source (12) emitting a light beam, a first lenticular array (14) to which the light beam is directed, a second movable lenticular array (16) to which the light beam exiting from the first lenticular array is directed and a light receiving element (18). The individual lenslets in the first and the second lenticular array refract the light beam into fine beams of periodic pattern or dark and bright fringes. As the movable lenticular array is being displaced in a direction parallel to the first lenticular array, the incident angle of the light beam exiting from the first lenticular array to the second lenticular array is changed, which results in a change in the position of the periodic pattern. Thus, as the position of the periodic pattern is changing, the output of the light receiving element varies accordingly and may readily be converted to a digital signal indicative of the position and direction of the movable lenticular array.