A new displacement sensor with light-field modulation, named as time grating, was proposed in this study. The purpose of this study was to reduce the reliance on high-precision measurements on high-precision manufacturing. The proposed sensor uses a light source to produce an alternative light-field simultaneously for four groups of sinusoidal light transmission surfaces. Using the four orthogonally alternative light-fields as the carrier to synthesize a traveling wave signal which makes the object movement in the spatial proportion to the signal phase shift in the time, the moving displacement of the object can be measured by counting time pulses. The influence of the light-field distribution on sensor measurement error was analyzed in detail. Aimed to reduce these influences, an optimization method that used continuous cosinusoidal light transmission surfaces with spatially symmetrical distribution was proposed, and the effectiveness of this method was verified with simulations and experiments. Experimental results demonstrated that the measurement accuracy reached 0.64 µm, within the range of 500 mm, with 0.6 mm pitch. Therefore, the light-field time grating can achieve high precision measurement with a low cost and submillimeter period sensing unit.