Linear and angular displacement measuring encoders are the most important measuring tools in the industry. Linear encoders are widely used in various positioning applications, such as numerical controlled (NC) machine tools and factory automation, since they are essential for precision positioning systems. In this study, a capacitive-type linear encoder with un-tethered slider is designed. The main components are made of printed circuit films. Hence, the encoder can be set up in thin inter spaces or on curved surfaces. The encoder consists of a long receiver film and a short transmitter film, respectively containing four-phase and two-phase electrodes. The transmitter is used as a slider and the receiver as a stator. In order to designs an unconstrained slider; the encoder employs a unique approach. Electrical power is supplied to the transmitter film by electrostatic induction which removes electric wires from the slider. In this study the encoder was built using a new signal processing circuit and its performance was evaluated. The new signal processing circuit is more compact and facilitates using this encoder for trade purposes. The result of experimental evaluation shows that the encoder has ±20 micrometers error.