This paper describes the ultra precise position estimation of a servomotor using a sinusoidal encoder based on Arcsine Interpolation Method for the cost reduction of circuit design. The amplitude and offset errors of the sinusoidal encoder output signals, from the encoder itself and analog signal processing procedures, are effectively compensated and on-line tuned by utilizing a low cost programmable differential amplifier without any special expensive equipment. For a theoretical evaluation of the practical resolution of this system, the relationship between the amplitude of ADC(Analog to Digital Converter) input signal errors and the anticipated resolution is also addressed. The performance of the proposed method is verified by comparing it with speed control characteristics of the servomotor driving system using a digital incremental 50,000ppr encoder in the experiments.