We demonstrate an active laser heterodyne interferometer which can automatically compensate environmental disturbances and is capable of precision displacement measurement. Two Zeeman He-Ne lasers were employed. Laser II was used as the light source to stabilize the interferometer by using a piezomirror in a feedback loop. The hetereodyne signal of the two lasers was used to directly calibrate mirror displacement, with the wavelength of laser I tuned to compensate change in the interference signal due to displacement only. Separation of the contributions to the interference signal from displacement and external disturbances was accomplished by using polarization optics. This interferometer was used to measure the hysteresis of a piezoelectric transducer (PZT) over a dynamic range of 0.5 microm with a resolution of +/-0.8 nm.