In conventional sensor systems, mechanical and electronic components are generally operating at separated locations. Smart sensors integrate mechanical and electronic elements to a single system, thus offering new facilities for a common error compensation.In this concept, a unit-specific temperature dependence and a non-linear characteristic curve of the mechanical sensor element can be tolerated, thus saving a lot of costs in the manufacturing process of the mechanical components. The behaviour of the mechanical sensor element is described by a two-dimensional sensor correction function: Given the output of the mechanical sensor element and a measured value for the temperature, the true measurement value can be calculated by an error correction unit.In this paper, different error correction methods are examined and evaluated which can be used for a wide range of sensor types. They are applied to the example of a short-circuit ring displacement sensor. It is shown that the approximation of the error correction function by a two-dimensional characteristic offers advantages in both accuracy and simplicity of the correction procedure. The correction algorithm can be carried out by a simple dedicated processor which requires small chip area if the smart evaluation circuit is integrated into a single chip.