The electric energy supply is necessary for different moving systems. Classical energy transfer is realized by flexible cables or slip rings, which are usually becoming weakness or performance limitations of the system. The contactless inductively coupled power transfer is a kind of new power transfer technologies. The electromagnetic induction technique has been used to achieve wide range power transfer. The application of this power transfer in inductosyn system has been assessed in the paper. As a high-precision position sensor, inductosyn has an important component which is contactless transformer. In this paper, the characteristics of contactless transformer are discussed on the basis of their structures and concepts. The circuit model and magnetic circuit model of contactless energy transfer system used in inductosyn were established and analyzed. According to the minimization principle of non-effective potential, the working frequency was confirmed and a contactless transformer was designed. Its design parameters were verified by calculation results of finite element method (FEM) and experiment results. The variation rule of output voltage has been obtained through testing.