The basic principle of measuring micro-vibration based on phase generated carrier (PGC) modulation-demodulation method is analyzed. A Michelson interferometer measurement system is set up and the micro-vibration measurement of acoustic frequency band signal is studied. Based on this, influences of random fluctuations of the vibration frequency and the phase mismatch in the modulation of the piezoelectric ceramic (PZT) on the demodulator are analyzed. Theoretical and experimental results show that the stability of the PZT modulation has a great impact on the final demodulated waveform. The stability of the modulation frequency can eliminate the signal distortion caused by demodulation, and phase matching makes the demodulated signal to noise ratio (SNR) maximum. In order to reduce the influence of PZT, the experimental system is improved.