We propose a simple and compact reading head with the Littrow configuration that will increase measurement range and reduce the complexity of a two-dimensional grating-based interferometer. The reading head contains only a beam splitter, two polarizing beam splitter modules, and two mirrors. The theoretical resolutions in two directions are 0.27 nm and 0.18 nm, respectively. In comparison with a dual-frequency laser interferometer, the proposed interferometer can measure displacement from 3 nm to 10 mm with high accuracy. The 3σ values in two directions for the difference are 1.67 nm and 1.35 nm for a displacement of 9 nm. Repeatability for a displacement of 1 μm is better than 2 nm.