A novel optical interferometer based on detecting the standing wave is realized by the newly developed ultra-thin film photodiode. The active layer of the ultra-thin film photodiode is thinner than half the wavelength of the incident light. Only a small part of the incident light is absorbed and the rest passes through the photodiode. This ultra-thin film photodiode can detect the intensity profile of the interference fringe of the standing wave, being inserted in the optical field. Taking advantage of this function, a compact interferometer having no reference arm is realized. The principle, design, fabrication, and performance as the displacement sensor are described. The signal obtained confirms the feasibility of this new interferometer. The displacement direction is also detected by a dual ultra-thin film photodiode with a phase shifter comparing the phases of the two signals.