Abstract-In this paper, we propose a novel interface concept for eddy current displacement sensors. A measurement method and a new front-end circuit are also proposed. The front-end circuit demonstrates excellent thermal stability, high resolution, and low-power consumption. The proposed idea is analytically investigated. The demodulation principle, as well as the interface implementation, is also addressed. This interface is being introduced for measuring submicrometer displacements in medium-to high-resolution applications. The interface system consumes less than 12 mW and has an extremely low thermal drift. The interface circuit will be implemented as a system-in-a-package (SIP). The full-scale range of displacement is 1 mm with 50-kHz signal bandwidth and 11-bit resolution (less than 500 nm). The signal conditioning circuit utilizes a standard 0.35-μm complementary metal-oxide semiconductor (CMOS) technology. Simulation results, which were achieved on the basis of experimental results of testing a prototype coil, also confirm the high performance of the interface system, as expected from analytical results. Compared with previous reports, this low-power interface system demonstrates a much lower temperature drift.