Underground displacement monitoring is a key means to monitor and evaluate geological disasters and geotechnical projects. There exist few practical instruments able to monitor subsurface horizontal and vertical displacements simultaneously due to monitoring invisibility and complexity. A novel underground displacement 3D measuring sensor had been proposed in our previous studies, and great efforts have been taken in the basic theoretical research of underground displacement sensing and measuring characteristics by virtue of modeling, simulation and experiments. This paper presents an innovative underground displacement joint inversion method by mixing a specific forward modeling approach with an approximate optimization inversion procedure. It can realize a joint inversion of underground horizontal displacement and vertical displacement for the proposed 3D sensor. Comparative studies have been conducted between the measured and inversed parameters of underground horizontal and vertical displacements under a variety of experimental and inverse conditions. The results showed that when experimentally measured horizontal displacements and vertical displacements are both varied within 0~30 mm, horizontal displacement and vertical displacement inversion discrepancies are generally less than 3 mm and 1 mm, respectively, under three kinds of simulated underground displacement monitoring circumstances. This implies that our proposed underground displacement joint inversion method is robust and efficient to predict the measuring values of underground horizontal and vertical displacements for the proposed sensor.