Abstract: In order to loosen the demands of sensitivity, displacement amplitude and installation accuracy caused by speed sensor which is traditionally used in dynamic testing for servo valves, a new testing method based on displacement measurement is designed, in which only displacement sensor is required to measure dynamic movement of piston in no-load cylinder. Speed signal can be obtained from displacement signal combined with synthetic data processing, including amplification, high speed sampling, sine fitting and differential calculus. Theoretical analysis and experimental research show that the new testing method based on displacement measurement can overcome the deficiencies caused by speed sensor and improve testing accuracy of servo valves during the scale of low frequency, and it also helps to simplify the process of installation and testing.