Aiming at the problems of static working point instability and signal distortion when using Mach-Zehnder(M-Z) interference structure in low frequency signal demodulation, a low frequency signal demodulation method based on M-Z interference structure is proposed. Phase compensation is carried out while phase modulation of interferometric detection system, and the traditional phase generation carrier method is improved by introducing direct-current filter. The optimal modulation depth is determined by software simulation, and the demodulation system is built to test the frequency and amplitude of low-frequency acoustic signals. The experimental results show that this method can successfully demodulate the low frequency signal with amplitude of 2.5 rad and frequency of 0.1 Hz, and the linearity of the signal frequency of 20 Hz is as high as 0.9995.