A two-color heterodyne interferometer based on the movement of the optical diffraction grating is proposed. The method allows us to measure the phase of synthetic wavelength f s directly and with high accuracy to extend the range of unambiguity for interferometric measurements by using two close wavelengths. Our experiment results show that the uncertainty in displacement measurement caused by the uncertainty in f s is 0.20 µm, smaller than the half of a single wavelength we used. The fringe order of a single wavelength can be determined without ambiguity. The uncertainty in displacement measurement can be improved further by using a single wavelength.