Laser spot detection is the key technique used in optical measurement. The precision and speed of the detection algorithm affect those of the optical measurement system directly. The traditional algorithms such as gravity model, Hough transform are unsatisfactory under some conditions. The laser spot detection algorithm referred in this paper is based on the LSM (least square method), and a circle is adopted to approximate the edge of the laser spot. Not only the center and radius can be detected simultaneously, but also the orientation precision is in the order of sub-pixels, and the speed is fast. The algorithm is suitable for real-time optical measurement.