High precision reducers such as cycloid reducers have been used to meet the mechanical system requirements of industrial robots for advantages such as: high reduction ratio, large torque capability, and high efficiency. Although efficiency of reducers is one of important performances, there are few studies on efficiency of a cycloid reducer considering its tolerance. This paper presents efficiency analysis of a cycloid reducer with tolerance using the approximate force distribution of an ideal cycloid reducer. First, we present an FE analysis of a cycloid reducer with tolerances. Then, we approximate force distribution of the cycloid reducer with tolerance using an ideal cycloid reducer without any tolerance. The approximated force distribution of the cycloid reducer can be easily calculated using the theory of the ideal cycloid reducer. Finally, efficiency analysis of the cycloid reducer is performed using the approximate force distribution. Tolerance has great effect on efficiency on a cycloid reducer.