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A high-precision displacement sensor has been developed for short-distance measurement with the interferometric method. This sensor uses a 3??3 fiber-optic directional coupler and a high-coherence laser source with 1550-nm wavelength to produce two interference patterns. A Lissajous figure is generated based on these two patterns. The change in displacement can be obtained after signal comparing and processing. Low cost and high precision are the main advantages of this sensor. Two signal-processing approaches are presented for displacement measurement.