This study presents a focusing type grating interferometer for precision displacement measurement. The proposed measurement technique combines the designs of grating interferometers and a focusing type optical path configuration, granting the system high resolution and high stability. This measurement system uses a helium-neon laser as a light source. A beam from the light source is passed through a Wollaston prism and is divided into p-polarized and s-polarized beams separated at 20°. The beams are then focused into the grating via a focusing lens and then diffracted. By choosing a specific combination of grating pitch and lens focal length, it is possible to partially superimpose the zero-order ppolarized beam with the first-order s-polarized beam and form interference after the beams pass through a polarizer. When the grating is displaced, a phase change is introduced into the interference signal, which is then received by a photodetector. Via a self-developed phase demodulation program, the grating displacement can be derived from the phase change of the interference signal. The experiments show that the proposed system can accurately provide displacement information, with a resolution of up to 10 nm and repeatability of up to 10 nm. In addition, the system was tested with random waveforms to verify its ability to measure irregular displacements, and the results prove that the focusing type grating interferometer possesses excellent displacement measurement capabilities.