An automatic visual-servo microassembly system is installed and tested. With a compliant polyurethane microgripper, a visual-servo system is implemented for micropeg alignment, micropeg transportation, and peg-in-hole assembly. The microassembly process is controlled by developing dynamic position-based servo through image calibration, regional-scanning with edge-fitting, and shadow-aided positioning algorithm. The main specifications of the system are gripping range of 60–90 μm, working space of 7 mm × 5.74 mm × 15 mm, and system bandwidth of 25 Hz. In performance test, cylindrical copper micropegs of diameter 80 μm and 88 μm are automatically aligned, gripped, transported, and assembled to a stainless rod with a mating hole of 100 μm.