Phase generated carrier (PGC) demodulation technology is a kind of homodyne demodulation algorithm widely used in interference fiber sensor systems. The definition and modulation principle of PGC are introduced briefly. Different kinds of demodulation algorithms are analyzed and the results show that the demodulation signal is affected by the amplitude of interference signals and modulation depth. The distortion of demodulation signals is greatly decreased by eliminating these impacts. Moreover, the sampling frequency can be reduced by using the mixing carrier with lower orders. The results have significant theoretical reference value on the demodulation technology of interference fiber sensors.