A method for compensating signals from an absolute angular position sensor assembly is used in conjunction with an absolute angular position sensor assembly having an input gear coupled to a rotating shaft. The input gear is meshed with an output gear that rotates as the input gear and the shaft rotate. The sensor assembly includes an input gear sensor and an output gear sensor placed in proximity to the input gear and output gear, respectively. The gears are configured so as to be sensed by the sensors. The method includes determining an angular position compensation value that is used to adjust an absolute position of the input gear, which in turn is used to compute the absolute position of the rotating shaft. The angular position compensation value for the revolution N+1 is determined as APCVN+1=(APRSN−AAPIGN)/&agr;+APCVN, wherein APCVN+1 is the angular position compensation value for the revolution N+1, APRSN is the angular position of the rotating shaft for the revolution N, AAPIGN is the adjusted angular position of the input gear for the revolution N, &agr; is a compensation factor that is greater than one, and APCVN is angular position compensation value for the revolution N.