Intonation!

Here's another mystery to alot of guitar players: adjusting the bridge for proper intonation on an electric guitar. It's really not particularly difficult or mysterious, really, and only requires a decent tuner and a screwdriver.

Intonation adjustments are changes we make to the "voicing" length of the string - that is, the length of the string between the nut and the saddle. If the length is not absolutely right, a guitar with properly tuned open strings will play out of tune on the higher the frets. Anytime you make any adjustments to your guitar which affects the strings, such as saddle or bridge height, truss rod adjustment, string guage change, and even pickup height adjustment (a stronger magnetic pull on the string lengthens it), your guitar's intonation will be affected.

Start by tuning your guitar's strings with an accurate electronic tuner. Be sure to recheck all strings and make any needed fine adjustments, once you have tuned each string. This is because, depending on the flexibility of your guitar's neck, you might have pulled some strings out of tune because you added tension to the neck by tuning the others.
Once you are in tune, play your sixth string, and ensure it's a proper E. Now play it at the twelfth fret. If it's not precisely playing the same note as when open, you need to adjust the string length. If the twelfth fret plays sharp, you need to lengthen the string by adjusting the saddle rearward. On a Fender type bridge, this is done by turning the screw that goes into the rear of the saddle clockwise. If the string plays flat at the twelfth fret, shorten the string length by adjusting the saddle in the opposite direction. Each time you make an adjustment, tune the open string, and recheck at the twelfth fret. Repeat these steps for all strings, and you're in business.