The displacement measurement theory, the optical path construct and the signal processing method of the sinusoidal phase-modulating self-mixing interferometer are proposed in detail. Phase modulation is introduced by electro-optic crystals in the external cavity and modulated self-mixing interference signal demodulation is achieved by Fourier analysis method. This technique has been used in micro-displacement measurement with nanometer accuracy, which is applied to large range displacement measurement. Agilent 5529A calibrator is included in the displacement measurement both in small and large ranges to evaluate the performance of the interferometer during the experiment. Experimental results show that the range of millimeters displacement is measured at sub-micrometer accuracy and the range of micrometers and nanometer displacement measurement can reach accuracy of 18 nm and 7 nm respectively in the common laboratorial environment. The error source in the measuring process is analyzed, and the results obtained are conformed to that of the experiments.