Capacitive displacement sensors are a kind of non-contact displacement sensor, measuring the position and change of position in capacitive materials to a high resolution. They are also able to measure the thickness or density of non-conductive materials. Capacitive displacement sensors are used in a wide variety of applications including semiconductor processing, assembly of precision equipment such as disk drives, precision thickness measurements, machine tool metrology and assembly line testing. These types of sensors can be found in machining and manufacturing facilities around the world.

Two identical parallel conductive plates of area ${\displaystyle A}$ separated by a gap of distance ${\displaystyle d}$ will have a capacitance ${\displaystyle C}$ of:

where ${\displaystyle \varepsilon _{0}}$ is the permittivity of free space constant and ${\displaystyle \varepsilon _{r}}$ is the relative permittivity (also called the dielectric constant) of the material in the gap.

There are two general types of capacitive displacement sensing systems. One type is used to measure thicknesses of conductive materials. The other type measures thicknesses of non conductive materials or the level of a fluid.

A capacitive sensing system for conductive materials uses a model similar to the one described above, but in place of one of the conductive plates, is the sensor, and in place of the other, is the conductive target to be measured. Since the area of the probe and target remain constant, and the dielectric of the material in the gap (usually air) also remains constant, "any change in capacitance is a result of a change in the distance between the probe and the target." Therefore, the equation above can be simplified to:

where α indicates a proportional relationship. Due to this proportional relationship, a capacitive sensing system is able to measure changes in capacitance and translate these changes in distance measurements.

The operation of the sensor for measuring thickness of non-conductive materials can be thought of as two capacitors in series, with each having a different dielectric (and dielectric constant). The sum of the thicknesses of the two dielectric materials remains constant but the thickness of each can vary. The thickness of the material to be measured displaces the other dielectric. The gap is often an air gap, (${\displaystyle \varepsilon _{r}}$≈1) and the material has a higher dielectric. As the material gets thicker, the capacitance increases and is sensed by the system.

A sensor for measuring fluid levels works as two capacitors in parallel with constant total area. Again the difference in the dielectric constant of the fluid and the dielectric constant of air results in detectable changes in the capacitance between the conductive probes or plates.