A compliant wrist instrumented between a robot and its end effector provides a necessary compliance for assembly operations, and the displacement and force information generated from the wrist sensor can be utilized to actively control the end effector. The authors discuss the position compensation for the detection of the compliant wrist due to the gravity load and other external forces at the unconstrained space, and the force control as the robot is constrained with the environment. The system stability problem and dynamic performance are investigated for the different control laws, wrist parameters, and environment models. By analysis and simulation, some meaningful conclusions are obtained. The results are useful for design of the compliant wrist device and determination of the compensator law in the feedback loop.