PURPOSE: A system has been developed for patient positioning based on real-time localization of implanted electromagnetic transponders (beacons). This study demonstrated the accuracy of the system before clinical trials. METHODS AND MATERIALS: We describe the overall system. The localization component consists of beacons and a source array. A rigid phantom was constructed to place the beacons at known offsets from a localization array. Tests were performed at distances of 80 and 270 mm from the array and at positions in the array plane of up to 8 cm offset. Tests were performed in air and saline to assess the effect of tissue conductivity and with multiple transponders to evaluate crosstalk. Tracking was tested using a dynamic phantom creating a circular path at varying speeds. RESULTS: Submillimeter accuracy was maintained throughout all experiments. Precision was greater proximal to the source plane (sigmax = 0.006 mm, sigmay = 0.01 mm, sigmaz = 0.006 mm), but continued to be submillimeter at the end of the designed tracking range at 270 mm from the array (sigmax = 0.27 mm, sigmay = 0.36 mm, sigmaz = 0.48 mm). The introduction of saline and the use of multiple beacons did not affect accuracy. Submillimeter accuracy was maintained using the dynamic phantom at speeds of up to 3 cm/s. CONCLUSION: This system has demonstrated the accuracy needed for localization and monitoring of position during treatment.