Shaft alignment is an important technique during installation and maintenance of a rotating machine. A high-precision laser alignment system has been designed with dual PSDs (Position Sensing Detector) to change traditional manual way of shaft alignment and to make the measurement easier and more accurate. The system is comprised of two small measuring units (laser transmitter and detector) and a PDA (Personal Digital Assistant) with measurement software. The laser alignment system with dual PSDs was improved on a single PSD system, and yields higher measurement accuracy than the previous design, and has been successful for designing and implements actual shaft alignment. In the system, the range of offset measurement is ±4 mm, and the resolution is 1.5 μm, with accuracy being less than 2 μm.