A laser tracking interferometer system (LTS), which can measure 3D coordinates, has been developed in our laboratory. The LTS makes use of the principle of laser trilateration. The principle satisfies Abbe's principles and the coordinates are calculated solely form length measurements. Consequently, measurements directly traceable to length standard can be achieved. The first generation trackers, however, were large, heavy and not so accurate. So, we developed a compact, accurate laser tracker. It has a hemisphere mirror, which is used as a tracking mirror and is driven by an X-Y moving table. The performance of this laser tracker was checked by a high precision coordinate measuring machine. The results of the experiments show that the displacement measuring error of this laser tracker is below 0.6 micrometers , which is much better than any other conventional laser trackers.