In order to effectively minimize the harmful vibration caused by rotor unbalance and to monitor the balance state in real time, an embedded on-line automatic balance system for a magnetic balancer is designed based on a modular design concept. First, an embedded controller is constructed using the combination of digital signal processing (DSP) and field-programmable gate array (FPGA). At the same time, a mathematical model of an adaptive control algorithm is established based on the traditional influence coefficient method. Multithreaded balance control software and a user interface are developed using C and C# language, respectively. Lastly, the experiment is conducted on a domestic electric spindle to verify the function of the whole system. The experimental results show that the unbalance-induced vibration can decrease by 43% at 3000 r/min.