A simple referencing technique is presented for a fiber optic reflective displacement sensor. Two receiving fibers are arranged side by side to operate in the negative and positive slopes of the output signal. The ratio of the two outputs provides common mode rejection. A theoretical model of the new referencing technique is developed and verified experimentally. The linear operating range of the sensor depends on the numerical aperture of the fibers and the diameter of the second receiving fiber. The minimum detectable displacement of a representative sensor is 1.57 nm/ in the audio frequency range, which agrees well with the theoretical value. The measured dynamic range of the sensor is 111 dB. Alternative sensor structures to reduce the size and to increase linear range and resolution are discussed. © 1999 Society of Photo-Optical Instrumentation Engineers.