A handheld scanner system and method is disclosed. The depicted embodiment is a mouse scanner system operable to scan a document. In this embodiment, the mouse scanner system includes a scanner built into a computer mouse and a scanner software application operating on a computer. The scanner includes a positioning system operable to output position indicating data and an imaging system operable to output captured image data. The data is sent to the scanner software application where a feedback image is constructed and displayed on a display in real-time or near real-time to allow the user to view what areas have been scanned. The scanner software application also constructs an output image that can be printed, saved or communicated.