A lithographic apparatus includes a position measuring system configured to measure a position of a moveable object with respect to a reference frame of the lithographic apparatus, in at least one direction of an orthogonal x-y-z coordinate system of the moveable object. The position measuring system includes an optical x-z-encoder configured to measure a displacement of a radiation source, a first grating, and a detector with respect to a second grating of the encoder. The first grating includes an alignment marker. A controller is configured to define a zero level of the moveable object with respect to the reference frame in at least one of the x- and z-direction by performing the scanning along the first grating, the alignment marker during the scanning step causing changes in the phase of the response of both the first positive and negative orders.