Identification and compensation of geometric errors in the machine tool are widely performed to increase machining accuracy. Periodic verification of the geometric errors, as introduced in ISO 230-2, helps monitor the machine tool accuracy during continued manufacturing operation and detect accuracy degradation early on. While interferometry-based error identification techniques are commonly applied, on-machine measurement (OMM), with its increasing availability to machine tools, can be used to identify geometric errors as an alternative to traditional interferometry-based techniques. As geometric errors also contribute to OMM error, assessment of the uncertainty of error identification is essential to ensure the reliability of the identification. This work presents a method to evaluate the uncertainty in the OMM-based geometric error identification process by Monte Carlo simulation. The error ellipse model, which represents OMM errors with better accuracy, is utilized to improve the identification uncertainty. The squareness errors, as position-independent geometric errors that contribute to machining inaccuracy, are taken as an example to demonstrate the presented method. The influence of the artifact setup errors on the error identification is also investigated. A series of experiments are conducted to evaluate the uncertainty of the OMM-based identification method. The geometric error obtained with the presented method is found to deviate by less than 10% from that obtained with an interferometry-based commercial instrument. The uncertainty obtained from the proposed Monte Carlo simulation method matches well with the uncertainty results obtained by the Guide to the Expression of Uncertainty in Measurement method and repeated measurements.