Advances in aerospace applications have created a demand for the development of higher precision, higher accuracy, radiation-hardened encoders. MicroE Systems' Mercury II aerospace encoder design provides the precision and accuracy required by these applications while also addressing radiation, weight, and alignment concerns. The encoder is a grating-based, reflective, interferometric encoder consisting of three major components: a scale, a readhead, and processing electronics. The system is a kit design that is easily configured and allows for forgiving of misalignments. Its large tolerance of tilts and translations during setup and operation, make this design ideal for aerospace requirements. The system is small in footprint and weight and requires minimal power for operation. The ability to attach multiple readheads to one processing electronics unit, as well as its alignment tolerances, makes it versatile enough to meet the most demanding applications.