An optical fiber displacement sensor with a large measuring range for simultaneous displacement and temperature measurement is presented in this paper. We developed a specific transducer based on the piston and hydraumatic structure to realize a large displacement measurement, which combined the large measuring range and high precision into a single sensor system. The spectrum showed two reflection peaks used to compensate for cross-sensitivity in the displacement detection. This displacement sensor can linearly work in a large measuring displacement range greater than 45 mm with a high sensitivity of 0.036 nm/mm. The sensor we reported can be developed for real-time displacement monitoring in many industrial environments such as the mechanical shape or liquid level monitoring.