In the fields of robotics, machine tools, and spacecraft, the measurement of the gear angular position lay the foundation for the closed-loop position feedback. In this article, an angular displacement sensor based on tunneling magneto-resistance effect is proposed for the precise angle displacement measurement. The developed sensor mainly consists of a tunneling magneto-resistance element, a signal conditioning circuit, a permanent magnet, and some necessary assembly components. The tunneling magnetoresistance element is composed of eight MTJs, which are arranged according to the dual-full bridge structure with the spatial electric angle difference of π/2. The signals containing time information and space information are obtained after the sinusoidal and cosine voltages signals are respectively connected in two Bridges. The signal is processed by a signal conditioning circuit, and then the angular displacement is measured via counting the clock pulses. The structure, working principles and signal conditioning method of the sensor are presented in detail. Moreover, a sensor prototype and a conditioning circuit are designed for the actual experiment, according to the measured gear with modulus of 1 and tooth number of 240. The prototype sensor has a theoretical resolution of 0.00001°. The experimental results show that the prototype sensor has a working stability of ±0.00023° within one hour, and its measurement accuracy is -0.0008611° to 0.001361° in the measurement range from 0° to 360°. Therefore, the proposed sensor can be well applied to the highly precise measurement of angular displacement.