Generally, the shapes of most precision manufacturing and machining products are described by complex free-form curves/surface, thus it is essential that modern CNC (Computer Numerical Control) machine tools are equipped with parametric free-form curve interpolators. In many application scenarios, a CNC machine tool is required to perform free-form contour following tasks. In order to design an effective motion control scheme so as to achieve satisfactory contouring accuracy, accurate contour error information is indispensable. To this end, this paper develops a parameter-based real-time contour error estimation approach for free-form contour following tasks. The attractive feature of the proposed approach is that it can find a backward estimated point located on the command trajectory through current parameter information. According to this backward estimated point, the contour error can be estimated more accurately in real-time so as to improve contouring accuracy. Several free-form contour following tasks have been performed to compare the performance of the proposed approach with that of existing contour error estimation methods.