An encoder with a tri-color LED includes an insulating base, five terminals, a conductive elastic piece, a tri-color LED assembly, an encoder substrate assembly, a conductive wiper assembly, and an insulated light shaft. The five terminals and the insulating base are formed integrally. The conductive elastic piece is received in a receiving chamber of the insulating base. The tri-color LED assembly is disposed in the receiving chamber. The encoder substrate assembly covers on both the conductive elastic piece and the tri-color LED assembly. The conductive wiper assembly is received in the encoder substrate assembly. The insulated light shaft passes through a through hole of the conductive wiper assembly and a through hole of the encoder substrate assembly. Thereby, through voltage variation of an independent tri-color LED loop, color mixing can be controlled, and that to combine the same with the encoder a function of lighting and marking can be achieved.