In order to improve the positioning accuracy of the micromanipulation system, a comprehensive error model is first established to take into account the microscope nonlinear imaging distortion, camera installation error, and the mechanical displacement error of the motorized stage. A novel error compensation method is then proposed with distortion compensation coefficients obtained by the Levenberg–Marquardt optimization algorithm combined with the deduced nonlinear imaging model. The compensation coefficients for camera installation error and mechanical displacement error are derived from the rigid-body translation technique and image stitching algorithm. To validate the error compensation model, single shot and cumulative error tests were designed. The experimental results show that after the error compensation, the displacement errors were controlled within 0.25 μm when moving in a single direction and within 0.02 μm per 1000 μm when moving in multiple directions.