A novel sensor for use in displacement metrology is proposed. It is based on grating imaging, which conventionally uses two amplitude gratings to generate a sinusoidal image. In the conventional method, the poor signal-to-noise ratio of the displacement output is one of the barriers to precise measurement, because 75% of the illumination light is trapped by the two amplitude gratings. In the proposed sensor a cylindrical lens array and a sine phase grating are used as the first and the second grating, respectively. Therefore, the illumination light is intercepted by neither, so that four times higher displacement signal amplitude than that of the conventional sensor can be expected. Consequently, four times higher signal-to-noise ratio can be obtained. Furthermore, the proposed sensor generates a sinusoidal output with little distortion by using the sine phase grating with optimized conditions, so that accurate measurement can be expected. In our prototype, a cylindrical lens array with a 200-μm period and a reflective sine phase grating with a 100-μm period were used.