A new bridge theory is put forward to analyze the reason of nonlinearity errors caused by the center and edge of Two Dimensional Position Sensitive Detector (2D-PSD) on the basis of expounding the lateral photoeffect,the operating principle,architecture and characters of improved 2D-PSD.A signal processing circuit for improved 2D-PSD including high-precision,low temperature excursion and high input impedance preamplifier,summator,subtracter and divider is used in high-precision laser collimation system.The signal processing circuit converts the optical signals processed by optical system including optical lenses,diaphragm,light filter etc into electrical signals,and then the electrical signals will be sent into data acquisition system.The straightness measure results of work-piece will be showed on computer by the linearity evaluation software.The characters of the system are fast response,high-resolution position,real-time detection etc.In the end,measuring results and some important conclusions are presented.