The automatic inspection system for TAB (Tape Automated Bonding) -type lead defects has been developed using image processing technique. In this system, the pattern matching method is used for inspection of defects. The positioning accuracy within the image of 1 pixel (about 5.2μm) is required for this method. Therefore the X-Y-θ stage with flexure hinges driven by piezoelectric actuator is designed for improving the positioning accuracy. The inspection method by using this developed system is shown below. The TAB lead is fixed by solenoids on the stage. The stage is controlled by a personal computer which is connected with the CCD camera. After detecting the position of the lead by image from CCD camera, the stage is moved to optimal position. Then the lead is inspected by the image processing computer. The obtained conclusions are as follows : (1) The positioning accuracy within 1 pixel is obtained. (2) The lead defects of about 10 μm (2 pixels) can be detected with the cycle time of 5 seconds.