A new self-mixing interferometry based on sinusoidal phase modulating technique is presented. Self-mixing interference occurs in the laser cavity by reflecting the light from a mirror-like target in front of the laser. Sinusoidal phase modulation of the beam is obtained by an electro-optic modulator (EOM) in the external cavity. The phase of the interference signal is calculated by Fourier analysis method. The interferometer is applied to measure the displacement of a high-precision commercial PZT with an accuracy of <10nm. The measurement range of the system mainly depends on the maximum operating frequency of EOM and the maximum sampling rate of A/D converter.