A linear variable differential transformer (LVDT) is a type of electro-mechanical transducer capable of measuring linear displacement with a high degree of accuracy. The transducer requires external electronic circuitry to produce a stable reference oscillator, and condition the return signal in order to determine displacement. Traditional LVDT circuits are based on analog design techniques, and suffer from several well known limitations such as component aging and drift. This paper presents an alternative design methodology using a digital signal processor (DSP) which is not subject to these effects.