In dimensional inspection using coordinate measuring machines (CMMs), the following issues are critical to achieve accurate inspection while minimizing the cost and time: 1) How can we select the sampling positions of the measurements so that we can get as much information from a limited number of samples as possible and 2) given the limited number of measurements, how can we assess the form error so that one can reliably decide whether the product is acceptable? To address these problems, we propose a wavelet-based model that takes advantage of the fact that the Lipschitz regularity holds for the CMM data. Under the framework of the proposed model, we derive the optimal sampling positions and propose a systematic procedure to estimate the form error given the limited number of sampled points. The proposed method is validated using both synthetic and real CMM data sets for straightness measurements. The comparison with other existing methods demonstrates the effectiveness of our method.Note to Practitioners-This paper was motivated by the problem of measuring a machined part and assessing the part compliance with tolerance specifications in dimensional inspection using CMMs. In coordinate measurements, there is an important tradeoff between the number of inspected points and inspection time. Therefore, it is important to determine optimal locations on the part to be inspected in order to gain maximum part information out of limited number of points. Given these limited number of measurement points, it is also important and challenging to decide the part acceptance reliably. This paper proposes a wavelet-based model for CMM measurements. The proposed model provides practitioners with the optimal sampling positions and the estimated form error given the sampled measurement points. While traditional methods often suffer from the underestimation of the form error, the proposed method estimates the form error unbiasedly with even a small number of measurements. The proposed method can be easily implemented using existing wavelet software packages. Even though this paper was motivated by issues that arise with CMM measurements, the methodology can be easily adapted to a wide range of industrial applications where taking measurements is expensive.