The invention provides a cursor positioning method of a handheld pointing device. The cursor positioning method comprises the following steps: extracting a first digital image of a reference point, and computing a first pointing coordinate according to an imaging position of the reference point in the first digital image; producing a cursor parameter corresponding to the cursor according to the first pointing coordinate; recording the first pointing coordinate when the handheld pointing device enters a lock hole positioning mode so as to fix the cursor at the first pointing coordinate; extracting a second digital image of the reference point when the handheld pointing device leaves the lock hole positioning mode, and computing a second pointing coordinate according to the imaging position of the reference point in the second digital image so as to produce a movement vector between the first pointing coordinate and the second pointing coordinate; computing the cursor positioning according to the movement vector and the first pointing coordinate, and correspondingly producing the cursor parameter for controlling the cursor movement. Through the adoption of the cursor positioning method, the convenience and stability on the operation of a user are improved.