To solve the problem of light source jitter and asymmetric 3 × 3 coupler, a phase demodulation method with the combination of an auxiliary reference interferometer and elliptic fitting algorithm is proposed, which is verified by simulation and experiment. By introducing additional phase modulation in the auxiliary reference interferometer, the parameters of the sensing arm can be calibrated in real time, which ensures the effective operation of elliptic fitting algorithm in small signal measurement. Consequently, the experiments show that the self-calibration scheme enables a higher signal to noise and distortion ratio with an average increase of 1.65 dB and 10.47 dB compared with the traditional Arctan and cross multiplication differential, respectively. Meanwhile, the self-calibration scheme can also effectively suppress the harmonic distortion, with a total harmonic distortion of -33.64 dB in the case of small signal.