Abstract: The output voltage computation model of a magnetostrictive displacement sensor was established considering the influence of the hysteresis effect based on the Jiles-Atherton hysteretic model, Wiedemann effect, and piezomagnetic effect. The consistency between the calculated data and experimental data shows the correctness of the output voltage model. The structure of the traditional Fe-Ga magnetostrictive displacement sensor was improved, eliminating displacement measurement hysteresis caused by the hysteresis effect of the magnetostrictive material, thereby reducing the influence of the residual magnetization and the driving pulse current on the output voltage so that the voltage signal-to-noise ratio increased from 14.7 to 27.6 dB. A type of Fe-Ca magnetostrictive displacement sensor was fabricated. The experiments show that the new structure can improve the linearity, repeatability, hysteresis, and precision of the magnetostrictive displacement sensor. Based on this new sensor structure, the research provides a theoretical and experimental basis for optimization and manufacture of magnetostrictive displacement sensors.