Measuring rock stratum displacement in dam grouting process is very important. A new displacement system is designed, comprising a programmable microcontroller Atmega16, a new grating capacitive displacement sensor(GCDS), DS1302 real time clock chip and announciator etc. The system has high sampling rate of 9600 baud rate and can trap the displacement equal to 0.001 millimeter in one second. Equipped with mechanical conveyance system, the system can be applied to the civil engineer. The experiment results show the instrument can measure accurately the displacement value and alarm geologic disaster in time, which can conduct continuous and accurate monitoring and provide operation decisions for dam engineers.