In this paper, a correction undersampling unwrapping algorithm based on phase estimation is proposed. On the basis of direct unwrapping algorithm and the compensation period, the algorithm compensates the phase jump caused by undersampling. The calculation of compensation period is based on motion continuity and phase estimation. Meanwhile, integer ambiguity correction module avoids the accumulated phase error. The proposed algorithm is verified by simulations, which shows that the algorithm has high feasibility and accuracy, and can be applied to realize the displacement measurement of the undersampled homodyne interferometer.