We developed a new system to couple the endoscope to an optical position measurement system (OPMS) so that the image frames from the endoscope camera can be labeled with the accurate endoscopic position. This OPMS is part of the EasyGuide Neuro navigation system, which is used for microsurgery and neuroendoscopy. Using standard camera calibration techniques and a newly developed system calibration, any 3-dimensional (3-D) world point can be mapped onto the view from the endoscope. In particular, we can display the coordinates of any anatomical landmark of the patient as it is viewed from the current position of the camera. This and other imageprocessing techniques are applied to the labeled frame sequence in order to offer the neurosurgeon a variety of control modules that increase the safety and flexibility of neuroendoscopic operations. Several modules, including a new motion alarm system and the "tracking" and "virtual map" modules, were tested in a human cadaveric model using the frontal and occipital approaches. A failure rate of 8.6% was experienced during testing of the first version of the software, but the second version was 100% successful. Thus, an endoscopic navigation system based on digital image processing has been developed that could be a revolutionary advance in image-guided surgery.