A laser based, noncontacting measurement instrument particularly adapted for the printed circuit board drilling industry is disclosed. The instrument accurately measures drill diameter, runout, and tip position under actual operating conditions. A laser beam is focused in space and the amount of light occluded by the drill bit as the bit is passed through the beam is sensed by a detector. Diameter, runout, and tip position are calculated by measuring the amount of occlusion, monitoring the angular orientation of the rotating drill; and correlating the amount of light occlusion to the angular orientation of the drill. The instrument automatically compensates for dust and debris in the optical path.