The paper proposed and verified a method of object edge detection based on the innovative defect spot working mode of the position-sensitive detector (PSD). With the output characteristics of the PSD in the defect spot mode and the size transformation properties of a focused beam, edge-detection sensitivity could be improved. Calibration experiments with the piezoelectric transducer (PZT) and object edge-detection experiments indicate that the object edge-detection sensitivity and accuracy of our method could reach 1 and 20 nm, respectively. Therefore, this method can be widely used in high-precision alignment, geometric parameters measurement, and other fields.