Based on the principle of double grating interference scanning， the miniaturized development of the interference scanning type grating encoder is realized by multiplexing transmission grating. A prototype grating encoder was developed suitable for precision displacement measurement. The circuit system of the sensor includes a signal conversion amplifier circuit and a signal processing circuit placed in the D-SUB shell. The 15-pin interface outputs four analog differential signals with a level of 2.5±0.5 V， which can be used for high subdivision to achieve high resolution， With RS422 interface adaptability， it can also improve the anti-interference ability of the sensor in long-distance transmission. The capacitance sensor is used as the displacement reference. The principle prototype of the grating encoder achieves a repeatability accuracy of ±30 nm， and meets the measurement speed requirement of 10 mm/s. The short-term displacement stability of 10 s reaches 5 nm， and the long-term stability of 6 hours reaches 70 nm.