A displacement sensor that uses a vertical cavity surface emitting laser (VCSEL), which is superior in terms of remediation of the mode-hop issue and modulation efficiency, is proposed. The interference signal in the sensor is processed with the phase-locked technique. This device allows real-time measurement of displacement. No unstable signals due to mode-hop were observed in the experiments. Displacement measurements recorded with this device indicated that it has an rms measurement accuracy of 0.3 mu m and 50 nm for displacements of 150 mu m and 1.2 mu m, respectively.