A photoelectric rotary encoder includes a light source that emits a light beam, a returning section that returns the emitted light beam to a direction opposite to an emitting direction of the beam, and a photodetector that is disposed on a substrate on which the light source is disposed and that detects the returned light beam via a disk having a detection pattern section. The photoelectric rotary encoder detects rotational displacement of the disk based on the detected returned light beam. In this photoelectric rotary encoder, an optical element that lets a stray beam component of the light beam from the light source escape via a side surface of the optical element, is disposed in front of the substrate on which the light source and the photodetector are disposed. The optical element covers the substrate and integrates the optical element and the substrate.