Linear position sensors are widely used in closed loop control of linear actuators. Since the industrial usage of linear planar motors with 2-degree of freedom (2-DOF) is increasing, it is expected to be increasing in demand for the 2-DOF sensors. Because using a 2-DOF sensor instead of two individual sensors leads to less complexity of the control system, less volume and mass, and more accuracy of position determination. Therefore, in this article a novel design for a 2-DOF linear, x - y , resolver is presented. In the proposed design the stator and the mover has orthogonal slots. Two perpendicular excitation/signal windings are located in the mover's/stator's slots. The excitation windings are fed using high-frequency voltages and the induced amplitude modulated voltages of the signal windings are used for calculating the mover's position in the plane. Furthermore, the influence of winding pole number, winding configuration, and finite dimensions of the ferromagnetic cores are discussed using time-stepping finite element analysis. It is shown that for the single speed sensor with sandwiched overlapping winding, considering longitudinal end effect of Maximum Position Error (MPE) increases from 5.41 mu m up to 23.779 mu m. Therefore, some techniques are proposed for compensating the end-effect. Finally, the compensated sensor with MPE of 15.832 mu m and its test setup is experimentally built. Also, the issue referred to the design and construction of the test circuit and the prototyping of the developed x - y resolver are presented. Close agreement between the experimental results and those of transient finite element method confirms the success of the sensor's optimal design.