We demonstrate a fiber optic dynamic displacement sensing system based on an unbalanced Michelson interferometer. In this system, the phase of the reference light is modulated with triangle and stepwise waveforms. The high-frequency triangle phase modulation makes the interferometer produce a series of chevron-shaped signals. From the change in temporal width of each signal, displacement of an object is measured with high time resolution. The effect of environmentally induced instability enhanced by a relatively large path length difference is suppressed by changing the phase by the step-wise modulation. A 10-kHz vibration displacement, which had not been measured without the step-wise phase modulation, was successfully measured by using a fiber optic Michelson interferometer even with a path length difference of 1 m.