The output signals of the rotary incremental encoder are used for motion sense discrimination, angular displacement and rotational speed measurement of the encoder shaft. The angular displacement can be measured with different resolutions. This paper presents an experimental system that enables the study of the rotary incremental encoder: working modes and methods for resolution improvement, displacement and speed measurement, sense discrimination. It is an intelligent measuring system that consists in one rotary incremental encoder, an IBM-PC compatible computer, an intelligent interface (with 80C552 microcontroller), a mechanical subsystem and a driving module. This experimental system is very useful in higher education and research activities because it illustrates how the same sensor can measure different physical variables, it enables the application of different knowledge (about sensors, signal conditioning and processing, microcontrollers, computers, analogue and digital circuits, motors and their electric control etc.), a soft method for resolution improvement and sense discrimination can be studied and verified, an industrial application of the rotary incremental encoders can be studied step by step. Many experimental results are presented to highlight the usefulness of this experimental measuring system.