An in-plane displacement sensor based on an asymmetric extrinsic fiber Fabry-Perot interferometer (EFPI) is proposed and demonstrated. The asymmetric EFPI composed of a step-shaped external reflector and a cleaved fiber end face can be equivalent to two parallel FPIs with slightly different cavity lengths. By calculating the peak intensity difference of the two FPIs, the in-plane displacement can be demodulated with enhanced sensitivity and suppressed common mode noise. Both theoretical analyses and experimental results show that the sensitivity and the linear range of the in-plane displacement sensor are dependent on the cavity length. A displacement resolution of 5 nm and a linear range of ±7µm under the cavity length of 250 µm are achieved in the experiment. The proposed in-plane displacement sensor with a nanometric resolution and compact size can be widely used in the fields of metrology, accelerometers, and semiconductor manufacture.