The phase modulation and demodulation of interferometric Mach-Zehnder fiber-optic hydrophone using phase-generated-carrier (PGC) techniques with direct source modulation are described. The additional influence of amplitude modulation in the course of phase modulation is analyzed through rigorous mathematical calculation, and the resolution is given accordingly. To select various parameters reasonably and match them well are discussed when taking this scheme. Some experimental results concerned are given. The theoretical analysis and the experimental results are important to the study of all fiber optic hydrophone arrays and the signal detection system design.