In order to obtain higher linearity and stronger anti-interference ability, an improved phase generation carrier demodulation algorithm was proposed. By using the interference signal and the base frequency mixing signal to perform the operation, the difference between the two signal times and the two signals is differentiated and the demodulation of the detected signal is realized. The simulation results verify the feasibility and advantages of the improved demodulation algorithm, the stronger anti-interference ability and higher linearity are obtained comparing with the conventional demodulation method, and the limitations that the fundamental frequency mixer applies only to the limitations of small signal is eliminated; The experimental system is built to verify the high accuracy of frequency demodulation and the consistency of the intensity response.