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This letter proposes a novel demodulation method for fiber-optic interferometer sensors. A fast square wave is added to the reference arm of the interferometer sensor in the form of phase modulation. Starting from this, we successfully developed a simple demodulation method that can greatly improve the conversion efficiency and overcome the unbalanced influences. Our experiment results show that a very small phase shift of about 6.3 × 10-5 rad can be detected, which proves high signal-to-noise ratio demodulated signal and low distortion in our demodulation method. The linearity between demodulated signal and test signal is shown to be over 99%.