A non-contact laser based probe capable of dimensional as well as error of form measurements of a workpiece being machined has been developed and presented in this paper. This probe is able to achieve dynamic error compensation in CNC machine tools. The measurements are achieved in in-process and are automatically fed back to the machine controller for intelligent error compensations. The measurements are traceable to standards of frequency allowing higher precision. Based on a well-resolved laser Doppler technique and real time data acquisition, the probe delivers a very promising dimensional uncertainty at around 3 microns over a range of 100 mm for dimensional inspection and a corresponding roundness uncertainty of 0.25 μm.