In order to solve the problems of non-contact displacement measurement, widerange and high sensitivity measurement in agricultural machinery equipment, a non-contact optical fiber displacement sensor based on Peanut-shape Michelson interference structure was proposed. The Peanut-shape fiber Michelson interference principle was analyzed, and the sensor structure combining the magnetic field and the Peanut-shape structure in fiber-type Michelson interference was designed, and by simulating the magnetic field, the magnetic field strength curve was obtained, theoretical analysis shows that a good sine wave can be obtained within the range of 1~3mm between the sensing detector and the magnetic scale. While there is a distance range from 0mm to 1mm, due to the large contact area, a sawtoothlike wave is obtained, according to results of theoretical analysis, the distance between the experimental sensor head and the magnetic scale is determined. The strain calibration system and a displacement test system of sensor were established. Experimental result showed that the Peanut-shape Michelson interference fiber sensor strain sensitivity reached 1.82pm/με, which was 1.5 times of that of bare fiber, and the linearity was 0.997;the spectral curve obtained by the displacement test was consistent with the magnetic field simulation curve, displacement measurement can be achieved, and linear fitting degree was 0.999. By encoding the permanent magnets, the direction of motion can be discerned.