In order to obtain high accuracy signals of displacement, a new displacement detection method for magnetic bearing based on DSP (Digital Signal Processor) was proposed. Therefore, a novel simple hardware circuit was designed, and an anti-aliasing filter circuit was equipped, which can solve problem of signals aliasing, and improve the anti-interference capacity of the system. In addition, a temperature compensation method based on the software was put forward to eliminate the temperature drift of displacement sensors. Finally, the effectiveness and reliability of the displacement dete system were verified in the experiment.