Optical sensors have the intrinsic advantages over electronic sensors of complete safety in hazardous areas and absolute immunity from both transmitting or picking up electromagnetic radiation. However, adoption of optical sensors in real-world applications requires a sensor design which has a sensitivity, resolution, and dynamic range comparable to an equivalent electronic sensor and at the same time must fulfill the practical considerations of small size and low cost. While sensitivity, resolution and dynamic range can be easily achieved with optical heterodyne sensors, the practical considerations make their near-term adoption unlikely. Significant improvements to optical heterodyne vibration and velocity sensors (flexibility, reliability and environmental immunity) have been realized with the use of semiconductor lasers, optical fibers and fiber-optic components. In fact, all of the discrete optical components in a heterodyne interferometer have been replaced with much smaller and more rugged devices except for the optical frequency shifter, acousto-optic modulator (AOM). The AOM and associated power supply, however, account for a substantial portion of both the size and cost. Previous work has shown that an integrated-optic, serrodyne phase modulator with an inexpensive drive circuit can be used for single sideband heterodyne detection. This paper describes the next step, design and implementation of a heterodyne interferometer using integrated-Optic technology to provide the polarization maintaining couplers and phase modulator. The couplers were made using a proton exchange process which produced devices with an extinction ratio of better than 40 dB. The serrodyne phase modulator had the advantage over an AOM of being considerably smaller and having a drive power of less than a milliwatt. The results of this work show that this technology is an effective way of reducing the size of the system and the cost of multiple units without sacarifying performance.