The application of dual-grating moiré fringe is introduced in lithography alignment. Minute angular displacement between the two alignment marks will lead to the tilt of moiré fringe, which has an influence in high-accuracy alignment. Proposed is a novel measurement method of angular displacement based on the phase of moiré fringe. The relationship between phase of moiré fringe and angular displacement is analyzed. Both simulation and experiment indicate that an angular displacement can be determined to achieve a linear displacement measurement with error of nanometer level.