Error analysis of measuring instruments is a significant part in the process of measuring instruments design with which primary error factors influencing measuring accuracy can be obtained. In order to correctly analyze and evaluate the sensors errors, the influence on final measurement result caused by error factors of all parts should be taken into account. Electric error consist zero voltage error and power errors including amplitude errors, phase errors and frequency errors. It will be difficult and cost much to improve accuracy of measurement with hardware method. So error correction technology is employed to ensure system accuracy. This method not only improves accuracy effectively but also reduces manufacturing cost of measuring instruments. In addition, errors suppression technology based on error separation, error correction of the Ordinary Least Square (OLS) and negative feedback model is proposed. Improving Time-grating displacement sensor’s measurement accuracy plays an important role in the mass production of Time-grating displacement sensor.