To control precisely the 2D rotation stable of a laser communication terminal unit on the satellite platform, a special optical angle encoder was designed to measure the rotary angle of the 2D rotation stable to realize the close control of the terminal unit. The grating disk, index grating and a signal pick-up method were designed and chosen respectively on the basis of design requirements of angle measurement device in the laser communication terminal. An absolute type binary coding was combined with a high quality electronics dividing to implement 24 bit absolute angle measurement of the encoder, and a four quadrant matrix encoding was used to effectively reduce the radial size of encoder. Moreover, the parted reading head type indicating gratings were employed in the encoder to allow its volume and weight to be smaller and lighter than that of the whole glass grating disk. The angle measurement precision of an optical angle encoder mounted on the satellite borne laser communication terminal unit was tested and analyzed after finely manufacturing, assembling and adjusting at a indoor temperature. The results show that precision of the designed encoder is about 0.7″(is superior to 1.0″). The laser communication terminal unit on the satellite platform operates normally in orbit and completes capturing, tracking and communication of the signals, which verifies that the designed encoder is characterized by high precision, high resistance to radiation and high working reliability.