This paper deals with the measurement and diagnosis of the machine tool errors by application of the ball link bar system. It includes the development of a new link bar, the in-plane and out-of-plane measurement techniques and the machine error analysis system. The new type of ball link incorporates an idealized three-point kinematic contact principle between the balls and sockets of the link bar, and provides the following features: (a) the minimum length of the link corresponds to the minimum length of a standard LVDT transducer, (b) the link is of light weight, (c) the accuracy and the repeatability of the link corresponds to that of the LVDT (linear variable differential transformer) transducer and (d) the link is mounted between two reference balls by using the spring force of the LVDT transducer and thereby eliminating the need for magnets as in the case of the conventional double-ball bar. With the in-plane and out-of-plane measurements under different test conditions, the machine errors, such as set-up errors, closing errors, backlash errors, dynamic backlash errors, positional errors, pitch motion errors, transient errors around the start point of the test path, vibration due to too high a gain setting, stick-slip errors, squareness errors and servo mis-match errors, can be analysed by the application of the machine error analysis software. Practical measurements on the TAKISAWA CNC (computerized numerical control) machining centre were carried out and the machine tool errors were effectively evaluated.