An integrated circuit for an optical encoder comprises a signal processing section for generating a position detection signal from a detection signal of a light receiving element, a belt-like power source potential layer which is formed at least between the signal processing section and the light receiving element and whose potential is pulled up to power source potential, and a plurality of conductive layers formed at various heights higher than the power source potential layer. A connection line which intersects the power source potential layer above the power source potential layer for electrically connecting the light receiving element and the signal processing section is formed by a conductive layer of the plurality of conductive layers other than the lowermost layer, in a region immediately above the power source potential layer. By keeping the power source potential layer as far away from the connection line as possible, power source noise entering the position detection signal is reduced.