The accurate characterization of linear coefficient of thermal expansion (CTE) of thin films is vital for predicting the thermal stress, which often results in warpage and failure of a MEMS structure. In this paper, special emphasis is placed on the development of novel test method to extend an ISDG (Interferometric Strain/Displacement Gage) technique to the direct and accurate CTE measurement of MEMS materials, AlN and Au. The freestanding AlN and Au films are 1 μm thick and 5 mm wide. Strain is directly measured by a brand-new digital type ISDG with two Cr lines deposited on the specimen while heating a specimen in a furnace. The whole test system is verified first by measuring the CTE for the NIST’s SRM (Standard Reference Material) 736 (Cu) block. The measured CTE is 17.3 με/oC up to 167 oC, which agrees well with the NIST’s certified value. The CTE of Au is 25.4 ± 1.15 με/oC and that of AlN film is 3.77 ± 0.12 με/oC. The in-plane displacement resolution is about 5 nm at the best circumstances.