A novel method is presented for one-dimensional (1-D) and two-dimensional (2-D) in-plane displacements measurement that is based on the heterodyne grating interferometry. The novel setup of the optical configuration reduces the airstreams disturbance and maintains the environmental vibration at minimum level, allowing high stability and low measurement error to be achieved. Resulting from the theoretical calculation, our method can be sensitive to the sub-picometer level. With highly controlled isolation system, the low frequency noise can be reduced to minimum level, and only high frequency noises are considered, our method can achieve the resolution about 0.5 nm within 250 μm displacement. In addition, 2-D in-plane displacement measurement can be accomplished with a single interferometer simultaneously.