A new method for measuring the straightness of travel of a moving table is described. The method uses two conjugate beams diffracted from a holographic grating that is mounted on the moving table. The intensity of two-beam interference is measured and the transverse displacement of the table is calculated from the change in intensity. The system is theoretically capable of measuring the transverse displacement to nanometer-order accuracy. Experimentally, a transverse displacement measurement with an accuracy of 0.12 μm was obtained over a staged travel of 100 mm.