A data processing method that extracts phase information through the integration of the trough part of the equidistant fringes was used in a phase shift measurement system based on a Michelson interferometer and a linear photo detector. The advantage of this method is substantiated theoretically and experimentally. The thermal drift and nonthermal drift of the system were observed and discussed. After deducting the error caused by the drifts, a 0.12-nm standard deviation was achieved in the displacement measurement with a movement range of several tens of nanometers. The measurement results of an antiparallel-aligned nematic liquid crystal (LC) cell and a polymer-dispersed liquid crystal (PDLC) cell by use of this system are also presented.