Self-mixing interferometry (SMI) based on nanometer fringes and polarization flipping is realized. The interferometer comprises a single-mode He-Ne laser and a high-amplitude reflectivity feedback mirror. The nanometer fringes are obtained by tilting the external feedback mirror. The fringe density is 35 times higher than that derived with conventional two-beam interference, and each fringe corresponds to a \lambda/70 displacement in external cavity length. Moreover, polarization flipping occurs when the external feedback mirror moves in the opposite direction. Such movement can be used to easily distinguish displacement direction. Experimental results show an optical resolution of displacement measurement of 9.04 nm with a range of 100 μm. The proposed SMI presents promising application prospects in precisely measuring displacement and calibrating other micro-displacement sensors because of its optical wavelength traceability.