To effectively eliminate the adverse effects of carrier delay on phase generated carrier (PGC) algorithm, a method based on synchronous carrier restoration is presented to generate the fundamental and second harmonic carrier signals. With this method the carrier information is directly extracted from interferometer signal and then the carrier signal is restored synchronously. The basic theory of synchronous carrier restoration is elaborated, and the influences of carrier phase delay are detailedly analyzed by theoritical analysis, numerical calculation and simulated demodulation. Results of the simulation and experiment show that the mixing signal is perfectly aligned with the interference signal, both of which are obtained with the synchronous carrier restoration method. Therefore, the proposed approach can guarantee PGC algorithm to realize stable and accurate demodulation.