The laser diode (LD) is modulated by the injection current of triangular waveform and a photo diode (PD) is packaged in the rear of the LD. The laser reflected by the target re-enters the cavity of LD and contains the target's displacement information. The information is carried within the laser intensity and can be pickup by the PD. We call this laser intensity as self-mixing interferometry (SMI) signal. While processing the sensing SMI signals, we should carefully determine the windowing function and reduce the effect of windowing in the FFT and IFFT process while applying the mathematical model. Simulation results show that the proposed design is able to accomplish the measurement of micro-displacement with high resolution and great accuracy.