For some special active magnetic bearings (AMBs) application occasions that demand the rotor isolated from external environment, especially when a metal layer is added, other sensors besides differential transformer displacement sensor (DTDS) can not used to detect the rotor displacements. Before being used, the impact factors and relevant extents on the DTDS performances are analyzed on the basis of magnetic and electrical properties the added metal layer between the DTDS core and the measured object. The DTDS performance with and without metal layers are separately simulated on the platform of MATLAB and ANSOFT. And then the DTDS with metal layers are applied to a five-DOF AMB test bed. The research results show that the sensor sensitivity has decreased 8.18% and cutoff frequency decreased 5%, while the linearity increased 38.7%. Despite of those changes, the rotor can also be stably suspended and rotated at 30 000r/min in the five-DOF AMB system.