An improved fundamental frequency mixing phase generated carrier demodulation algorithm was proposed. By introducing a direct current filter, the improved algorithm could overcome the limitation that the traditional fundamental frequency mixing phase generated carrier demodulation algorithm was only suitable for small-signal. The improved algorithm retained the useful components of the interference signal and reduced the sampling frequency of the system by introducing an anti-aliasing filter. The up-limit amplitude of the demodulated signal was maximized when the sampling frequency was fixed. And the hardware implementation scheme to realize the improved algorithm was presented. Simulations were carried on the Matlab platform and the digital signal processor simulation platform code composer studio prove the feasibility of the improved algorithm.