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A new type of small magnetic rotary encoder is presented. The device detects the magnetic field of a permanent magnet attached to the end of the rotating shaft using complementary metal-oxide semiconductor (CMOS) magnetic sensors [magnetic field effect transistor (MAGFET) arrays] set in a square arrangement. The sensor array is integrated onto a CMOS chip along with angle-detection circuits, leading to the realization of a compact, cost-effective rotary encoder. A prototype sensor chip with dimensions of 4.3×4.3 mm2 is shown to provide error as low as 3.5° without offset calibration and 0.36° with offset calibration, based on an angle calculation method with mean square estimation. This result shows that the CMOS rotary encoder can achieve resolution of 10 bits/rotation at the cost of calibration.