An important use of the self-mixing effect inside a frequency-modulated single-mode laser diode is in laser velocimetry and range-finding applications. The optical beam reflected by a target and injected into the laser diode cavity modulated by a reshaped current is mixed with the light inside the cavity, causing variations of the optical output power. A theoretical analysis of this effect is proposed, based on the determination of the beat frequencies of the optical power variations, to improve the accuracy of laser distance measurement. A resolution of ?1.5 mm from 50 cm to 2 m is obtained when thermal effects are taken into account.