Purpose: The goal of this paper is to present the design and performance of a position encoding circuit for 16¡¿16 array of position sensitive multi-anode photomultiplier tube for small animal PET scanners. This circuit which reduces the number of readout channels from 256 to 4 channels is based on a charge division method utilizing a resistor array. Materials and Methods: The position encoding circuit was simulated with PSpice before fabrication. The position encoding circuit reads out the signals from H9500 flat panel PMTs (Hamamatsu Photonics K.K., Japan) on which 1.5¡¿1.5¡¿7.0 mm3 L0.9GSO (Lu1.8Gd0.2SiO5:Ce) crystals were mounted. For coincidence detection, two different PET modules were used. One PET module consisted of a 29¡¿29 L0.9GSO crystal layer, and the other PET module two 28¡¿28 and 29¡¿29 L0.9GSO crystal layers which have relative offsets by half a crystal pitch in x- and y-directions. The crystal mapping algorithm was also developed to identify crystals. Results: Each crystal was clearly visible in flood images. The crystal identification capability was enhanced further by changing the values of resistors near the edge of the resistor array. Energy resolutions of individual crystal were about 11.6%(SD 1.6). The flood images were segmented well with the proposed crystal mapping algorithm. Conclusion: The position encoding circuit resulted in a clear separation of crystals and sufficient energy resolutions with H9500 flat-panel PMT and L0.9GSO crystals. This circuit is good enough for use in small animal PET scanners. (Nucl Med Mol Imaging 2008;42(6):469-477)