Aiming at the measurement accuracy of laser on-machine measurement of workpiece features, the key error influencing factors and compensation applications of the measurement system are studied. When using the laser displacement sensor as a tool to measure the workpiece features on-machine, the measurement results are affected by the tilt error of the laser displacement sensor and the geometric error of the CNC machine tool. To correct the measurement error caused by the laser displacement sensor when the object surface is tilted, a tilt error experiment is designed, and the Legendre polynomial is used to model and compensate for the tilt error. After compensation, the tilt error can be reduced to within ±0.025 mm. Aiming at the influence of the geometric error of the linear axis of the CNC machine tool on the measurement results during the stationary laser on-machine measurement, a tilting installation experiment of the Double ball bar (DBB) is designed, and the geometric errors of the X-axis and the Y-axis are decoupled using parametric modeling. Finally, according to the established tilt error and geometric error models, the on-machine measurement results of workpiece features are compensated. The results show that after the error compensation of the workpiece feature on-machine measurement results, the linear dimension measurement error is less than 0.05 mm, and the angle measurement error is less than 0.08°, which is significantly improved compared to the on-machine measurement accuracy before compensation.