A two-wavelength sinusoidal phase-modulating (SPM) laser diode (LD) interferometer for nanometer accuracy measurement is proposed. To eliminate the error caused by the intensity modulation, the SPM depth of the interference signal is chosen appropriately by varying the amplitude of the modulation current periodically. Then, the refine theory is induced to the measurement, and the two-wavelength interferometer (TWI) is combined with the single-wavelength LD interferometric technique to realize static displacement measurement with nanometer accuracy. Experimental results indicate that a static displacement measurement accuracy of 5 nm can be achieved over a range of 200 \mu m.