Abstract: In response to the current demand for high-precision planar displacement measurements in advanced manufacturing equipment, this paper proposes an xz dual-axis grating interferometer. The system adopts a biaxial Littrow incident light path structure, established using a biaxial beam splitter mirror and right-angled prism mirror. The relationship between the parallelism of the outgoing beam, the beam spacing, and the position and angle of the incident light is analyzed. Experimental results verify the feasibility and measurement performance of the proposed interferometer. The grating interferometer achieves a displacement resolution of 5 nm along the x-axis and 7 nm along the z-axis. After correction using the Heydemann algorithm, the periodic nonlinear error is reduced to ±5 nm. Over a travel range of 10 mm, the measurement accuracies are ±50 nm along the x-axis and ±100 nm along the z-axis.