To satisfy the requirement of encoder miniaturization and high measuring accuracy, a new-style absolute matrix encoder which offered significant advantages over small reticling circles and high precision was presented in the paper, which carried out the design of new-style matrix encoding disc and coding circuit, exact encoding track calibration and the design of fractionizing circuit by studying the photoelectric encoder. The Matlab simulation results prove that the encoding and coding methods are feasible. The test showed that the cubage of encoder was super-small, its resolution can reach 24 bits, and its precision can reach 0.2″ by A/D converter. The feasibility of encoding and coding method was further proved.