Theodolites can be differentiated either by their direction reading system or the precision of their direction reading system, which are generally related. Two types of non-electronic theodolites that are widely used and defined by their precision are the 20" theodolite and the 1" theodolite. Electronic theodolites have direction measurement precisions typically in the range of 5" to 0.5". Both 1" theodolites and the more precise electronic theodolites generally use a double circle reading mechanism. This technique averages readings from both sides of the circle to minimise mechanical alignment errors.

There are three types of reading systems in use in modern theodolites:

• Direct - the direction measurement is read directly off a scale.
• Micrometer - the direction measurement is read off a scale and a micrometer reading.
• Electronic - the direction measurement is read off a numeric display.

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