We present a fiber optic displacement measurement model based on finite reflective plate. The theoretical model was derived, and simulation analysis of light intensity distribution, reflective plate width, and the distance between fiber probe and reflective plate were conducted in details. The three dimensional received light intensity distribution and the characteristic curve of light intensity were studied as functions of displacement of finite reflective plate. Experiments were carried out to verify the established model. The physical fundamentals and the effect of operating parameters on measuring system performance were revealed in the end.