Platform jitter is an important source of bit error in an intersatellite laser communication system. In this study, we investigate the error performance of the M-ary pulse position modulation (M-ary PPM) system with a finite extinction ratio under the influence of sighting error. Further, we obtain the relation between the bit error rate of the system and the signal-to-noise ratio based on the effects of the transmitter’s extinction ratio, platform jitter, and receiver noise. The simulation results show that the bit error rate is related to the normalized standard deviation with respect to platform jitter, the number of PPM orders, and the extinction ratio of the transmitter. Furthermore, the effects of pointing error on the performance of the communication system are independent of the extinction ratio of the transmitter. The system bit error rate does not necessarily decrease with the increasing number of modulation orders based on the analysis of the total power loss of the system. 16-PPM is the optimal choice in case of a commercial transmitter with an extinction ratio of 20 dB.