A sigma-delta type displacement-to-digital converter suitable for a non-contact inductive displacement sensor is presented here. The constituents of a conventional sigma-delta scheme have been suitably modified so that a non-contact inductive displacement sensor excited by a sinusoidal voltage source becomes integral to the delta modulator. The conversion logic is designed such that the digital output of the proposed converter directly indicates the displacement that is being sensed. The results obtained from simulation studies and an emulated sensor model establishes the functionality of the proposed converter. Experimentation conducted on a PCB-based prototype sensor unit built in the laboratory further corroborates the efficacy of the proffered scheme. © 2017 IEEE.