A position diagnostic test for a shift-by-wire system is provided. The shift-by-wire system includes a shift lever configured to move along a shift path, a first and a second position sensor configured to generate a first and a second position signal, respectively, of the shift lever along the shift path, and a controller configured to receive the first and second position signals. The first position sensor includes a first x-coordinate value and a first y-coordinate value, and the second position sensor includes a second x-coordinate value and a second y-coordinate value. The position diagnostic test includes performing a rationality test on each of the coordinate values. If at least one predetermined condition exists for a particular coordinate value, then it fails the rationality test, and the position signal containing the coordinate value may be disregarded.