A method to improve the accuracy of the wavelength encoding varied line-space grating displacement sensor is presented. Based on the detailed analysis of the measured displacement errors from the single-mirror configuration sensor, a dual-reflector configuration is used to replace the previous configuration, and greatly decreases its errors. Experiments are conducted in order to make comparison of the two configurations. The results show that the measured displacement error of the sensor with dual-reflector configuration is lower than 0.03 mm in full scale (0 to 50 mm), only about 10% of the sensor with single-mirror configuration.