In order to improve the accuracy of computer numerical control(CNC) machine tools, a compound modelling method of geometric and thermal error was presented based on linear interpolation and Newton interpolation. Online realtime error compensation was implemented by applying the CNC external machine zero point shift function and a novel self-developed synthesis error real-time compensation system. The experimental results show that the new model is convenient in calculation and precise in prediction. Therefore it is suitable for the real-time compensation of geometric and thermal error of machine tools in complex industrial applications.