A new optical-fiber frequency domain interferometer (OFDI) device for accurate measurement of the absolute distance between two stationary objects, with centimeter measuring range and nanometer resolution, has been developed. Its working principle and on-line data processing method were elaborated. The new OFDI instrument was constructed all with currently available commercial communication products. It adopted the wide-spectrum amplified spontaneous emission light as the light source and optical-fiber tip as the test probe. Since this device consists of only fibers or fiber coupled components, it is very compact, convenient to operate, and easy to carry. By measuring the single-step length of a translation stage and the thickness of standard gauge blocks, its ability in implementing nanometer resolution and centimeter measuring range on-line measurements was validated.