Optical triangulation displacement sensors are widely used in many applications due to the advantages of noncontact measurement, simple structure, good resolution, and long operating range. However, they commonly have several errors, such as speckle effects and electronic noises, etc. Among them, reducing electronic noises is very tedious and hard. To reduce the effect of electronic noises, conventional systems use sequential averaging techniques. Since electronic noises are random in nature, their variances can be reduced with an averaging operation. However, the averaging is inherently a time-consuming process which requires many measurements. To reduce the time for averaging and the number of measurements, several sensor modules or faster signal processing hardware are required. Therefore, these alternatives are not cost effective and increase the size of the measurement system. In this article, we propose a simple and cost-effective system structure for optical triangulation displacement sensors, which reduces time for averaging and the number of measurements by using a transmission-type diffraction grating. The diffraction grating helps us to obtain several signals simultaneously. Therefore, it is achievable to reduce time for averaging and the number of measurements. The feasibility of the proposed system was verified through experiments. When only two diffracted orders are used for obtaining signals, the rms of noise is reduced by 1/root2. (C) 2001 American Institute of Physics.