In an optical encoder for measuring relative displacement, a scale 10 has a reference mark 14 composed of a reflection slit formed on at least one point of an incremental track 12, a detection portion (20) has a light irradiation portion (24), main light receiving portions 30a, 30b, 30ab and 30bb that are disposed at the surrounding centering around the corresponding light irradiation portion and output incremental signals four phases of which are different from each other, and a pair of reference signal light receiving portions 32z and 32zb that are disposed in the direction perpendicular to the length measurement direction using the light irradiation portion as the center of point symmetry, and a signal processing portion 40 has a three-phase signal generation portion 48, a quadrature sine wave signals generation portion 50, a direction judgment circuit 56, an internal period counter 58, and a reference signal processing portion 60, thereby bringing about a micro-sized optical encoder capable of detecting the reference.