In order to solve the problems of large error and uncontrollable clearance caused by optical de-rotation gear transmission in panoramic electro-optical observation and sighting equipment, a position control system is proposed in which the optical de-rotation mechanical transmission is removed and substituted with a position control system without mechanical transmission.Using modern control theory and on the basis of analyzing the subject model in the optical de-rotation position control system,the complex control algorithm is designed, dominated by Proportional-Integral-Differential(PID) controller and aided by nonlinear control. The position control system is established,adjusted and tested with the single chip processor C8051 served as the core of controlling,the coder as the position transducer,electro-optical stage azimuth as the controlling singnal.The test results indicate that the optical de-rotation performance is better than that of the mechanical transmission, and the high precision position control is realized.