Point triangulation probes (PTBs) fall into a general category of noncontact height or displacement measurement devices. PTBs are widely used for their simple structure, high resolution, and long operating range. However, there are several factors that must be taken into account in order to obtain high accuracy and reliability; measurement errors from inclinations of an object surface, probe signal fluctuations generated by speckle effects, power variation of a light source, electronic noises, and so on. In this paper, we propose a novel signal processing algorithm, named as EASDF (expanded average square difference function), for a newly designed PTB which is composed of an incoherent source (LED), a line scan array detector, a specially selected diffuse reflecting surface, and several optical components. The EASDF, which is a modified correlation function, is able to calculate displacement between the probe and the object surface effectively even if there are inclinations, power fluctuations, and noises.