Harmonic distortion is one of the key factors that affects the measurement accuracy and resolution of optical encoders. However, it is a challenge to dynamically suppress the harmonic distortion when optical encoders operate at variable speed. We explore the application of the Vold-Kalman filter in the signal processing of optical encoders. The basic principle of the Vold-Kalman filter is introduced. The dynamic harmonic suppression model based on the Vold-Kalman filter is formulated. The weight factor of the VoldKalman filter is optimized. The Vold-Kalman filter is developed, which is based on Labview and FPGA. It is applied to signal processing of an optical encoder. Simulation results show that the amplitudes of the dominant third and fifth harmonics are suppressed by about 95% and 98% , respectively. Experimental results indicate that the amplitude of the third harmonic is suppressed by about 71. 3% , and the amplitude of the fifth harmonic is suppressed about 83. 2% . Both simulation and experimental results demonstrate the effectiveness of the Vold-Kalman filter in dynamic harmonic suppression of optical encoders.