The alternating current bridge circuit was utilized as the signal demodulation circuit of the eddy current displacement sensor coil, and the sinusoidal alternating current voltage with a frequency of 1 MHz and an amplitude of 24V was used as the excitation source of the bridge circuit. The output voltage of the bridge was analyzed by Taylor series. The phase sensitive detection circuit and the rectifier filter circuit were respectively simulating to demodulate the impedance signal of detection coil by the Multisim software, which verified the accuracy of Taylor series expansion analysis. The simulation results indicated that the coil impedance were more effectively demodulated by rectifier filter circuit than phase sensitive detection circuit when the rate of impedance variation of the detection coil was within 10% and there was no temperature compensation. © 2019 IEEE.