An innovative interferometer based on the heterodyne interferometry, grating shearing interferometry, and Michelson interferometry for precise displacement measurement is proposed. The system configuration is simple and easy to set-up. A heterodyne light beam is generated by using an Electro-Optic Modulating (EOM) technique for amplitude modulation. While the heterodyne light beam normally passes through a semi-transmission diffraction grating, the reflection part (Michelson interferometry) for out-of-plane displacement detection and the diffraction part (Grating interferometry) for in-plane displacement detection can then be obtained. The experimental results demonstrate the system has the capability of providing two-dimensional displacement information simultaneously. The measurement resolution and range can achieve to nanometer and millimeter levels.