This document describes the design and development of a linear variable differential optical sensor (LVDOS) for measuring small linear displacements. The LVDOS works by using a solid metallic obstacle that moves horizontally over the open surface of an aluminum channel, which is illuminated from above by LED light sources. Two photo detectors placed under the channel surface detect changes in diffuse light intensity as areas become covered and uncovered by the obstacle's movement. Experimental results showed the sensor can satisfactorily measure small range displacements based on the voltage differences between the photo detectors.