In the design and improvement of an LVDT, theoretical analysis or numerical analysis can facilitate optimal design for the sensor performance by effectively and quickly predicting the measurement range and the sensitivity with the changes of design and process variables. In this study, analysis models of the LVDT were proposed through theoretical analysis and the finite element method (FEM), and the effects of design and process variables on the sensitivity and linear region of the LVDT according to the core motion were analyzed by the proposed models. The theoretical model for the relation between the output voltage and the change in core position, including the position before entering and after passing the secondary coil, was developed by deriving the change in the mutual inductance of the primary and secondary coils. Meanwhile, the core, coil, magnetic shell, electric circuit, and core movement of the LVDT were constructed as a three-dimensional model for the FEM to obtain the voltage output using a commercial analysis program. The results of the LVDT output characteristics analyzed by the theoretical and the finite element models were mutually verified. By the verified models, a series of the analyses of the LVDT were performed with changes in the supply voltage, core size, number of primary and secondary turns, distance between coils, coil length, initial core position, and permeabilities of core and magnetic shell. The effects of those variables on the sensitivity and linear region of the LVDT could then be revealed.