A phase subdivision of absolute coding is proposed to enhance the resolution of absolute coding grating in displacement measurement . The used grating consists of multiple code channel grating. CCD image sensor acquires information of multiple code channel in measurement section. The absolute phase distribution in measurement section is obtained by Fourier transform, filtering, inverse Fourier transform, and phase unwrapping. Practical absolute coding grating is fabricated by lithography. The size of minimum code pattern is 27.36 μm for light and dark fringe. Space period of benchmark code sequence pattern is 54.72 μm, and the length of grating is 14008.32 μm. A large number of displacement tests are carried out. In the displacement test of step length approximate 3 μm, compared with the record value of standard equipment, the standard deviation is 0.2057 μm. The precision reaches sub-micron level. The stability tests demonstrate that the resolution of 600 times of subdivisions on minimum code pattern is gotten.