Each axis of CNC machine tools is subjected to linear positioning error, straightness errors at two right angles to the direction of travel, pitch, yaw, roll and squareness error. Analysis of these errors using a laser measurement system provides the manufacturers with a way to achieve better accuracy and hence higher quality output from their processes. In this paper, techniques to measure the parametric errors of CNC CMM in the form of linear, angular, straightness, squareness, flatness of the machine bed and the diagonal errors by a laser calibration system have been discussed. When the CMM is equipped with in conjunction with a rotary axis, the system can also calibrate the rotary axis by rotary reference indexer. The process of using the data obtained from a calibration cycle to calculate the compensation values and by feeding the data into the machine's controller to improve the machine's positioning accuracy has also been discussed.