Optical triangulation displacement sensors are widely used for their non-contact measurement characteristics, sub-micron order resolution, simple structure, and long operation range. However, errors originating from surface inclination, speckle effect, light source fluctuation, and detector noise limit the wider use. In order to minimize these errors, the structure for optical triangulation displacement sensors, which is composed of an incoherent source and a linear CCD, has been proposed. But using a linear CCD causes several problems in signal processing. In this paper, we propose an adequate signal processing system for the proposed structure. With the help of the proposed algorithm, the limited resolution problem of CCD can be solved.