A displacement measuring interferometer system and method for measuring the distance between two known points is disclosed. An interferometer is configured to provide a reference reflection of a reference point and a measurement reflection of a measurement point. A tunable laser is used to scan in wavelength into the interferometer to detect interferometer characteristics to measure the distance between the reference point and the measurement point from the interferometer characteristics. The invention describes a displacement measuring interferometer which uses a scanning tunable laser to accurately map out a fringe such that significant improvement in accuracy can be achieved by use of a tunable laser to scan the wavelengths and determine the fringe.