A position sensor based on grating projection with spatial filtering and polarization modulation is presented. A grating is projected onto the object to be measured through a 4f optical system with a spatial filter. After reflected by the object, the grating projection is imaged on a detection grating through another 4f optical system to form moire fringes. The polarization modulated moire signal is detected to obtain the position information of the object. In the position sensor, the moire signal varies sinusoidally with the position of object. The measurement is independent of the incident intensity on the projection grating and the reflectivity of the object to be measured. In experiments, the effectiveness of the position sensor is proved, and the root mean square (RMS) error at each measurement position is less than 13 nm.