Considering the issue of noise reduction associated with Laser Doppler Interference (LDI) signal, the paper presented a correlation coefficient local capping robust empirical mode decomposition (REMD) filter algorithm for LDI laser sensor that enables more robust reconstruction of the displacement information from an LDI signal. The performance of the algorithm is studied, and it is shown that the algorithm is capable of removing high-frequency noise. Useful information can be extracted more easily by this method, and the Hilbert phase unwrapping displacement reconstructions method based on this algorithm has been experimentally validated. The experimental results show that the proposed method can improve the frequency separation performance in experiments, and is robust against noise interference.