Six-degree-of-freedom displacement measurement systems are applicable in many fields: precision machine control, precision assembly, vibration analysis, and so on. This article presents a new six-degree-of-freedom displacement measurement system utilizing typical features of a diffraction grating. It is composed of a laser source, three position sensitive detectors, a diffraction grating target, and several optical components. Six-degree-of-freedom displacement is calculated from the coordinates of diffracted rays on the detectors. A forward and an inverse problem were solved to compute the full pose of an object through kinematic analysis. The experimental results show that the measurement system had a maximum error of +/- 10 mu m for translation and +/- 0.012 degrees for rotation. The repeatability is about 10 mu m for translation and 0.01 degrees for rotation. (C) 2000 American Institute of Physics. [S0034-6748(00)04708-0].