Abstract Biconical optics with excellent profile accuracy and bright surface finish are increasingly applied in the fields of aviation, aerospace, biology, consumer electronics, etc. However, the extreme demand of micron/sub-micron scaled profile accuracy of the biconical optics poses a great challenge for the manufacturing process. In this study, a novel compensation strategy was developed based on the on-machine non-contact laser displacement sensor and wavelet decomposition technique for depressing the final profile error of biconical optics machined by raster grinding. Firstly, a profile error evaluation model was established to restructure the error surface measured by the laser sensor, and the low-frequency profile error was separated successfully from the reconstructed errors using the proposed technology. Secondly, the momentous error sources that affect the profile accuracy were identified and analyzed, and a wheel-error model was established based on the correspondence between the error sources and the profile errors, which is then applied for the wheel path compensation. Finally, the compensation experiments were undertaken. The profile errors along the workpiece length (220 mm) and workpiece height (105 mm) decreased from 15.425 μm to 1.678 μm and 18.6 μm to 1.6948 μm, respectively. The PV-values of the machined surface with profile error compensation reduced from 21.6 μm to 1.5486 μm in a 220m × 105 mm measurement area. This demonstrates the effectiveness of the proposed profile error compensation methods for the biconical surface.