This paper deals with the development of an embedded system to measure the linear displacement deploying electromechanical transducer, LVDT (Linear Variable Differential Transformer). On survey it is found that linear displacement measurement have key applications in Instrumentation and Testing, Process and Packaging, Automation, Robotics, Suspension Measurement and Monitoring, Machine Presses, etc. Moreover, in such domain this displacement is in micrometer range. Hence, easy, immediate and preciseness in digital readout is quite essential for further processing or decision making. Therefore, microcontroller MCS-51 series based system is developed to measure the linear displacement, emphasizing the LVDT transducer developed in the laboratory to sense mechanical motion or vibrations. The developed LVDT transducer is interfaced through the microcontroller AT89S52, which has promising features like lowpower, high-performance CMOS 8-bit, In-System Programmable (ISP) Flash memory, etc. The data acquisition system (DAS) DAS is developed utilizing operational amplifier TLC 271 and ADC 0804. The smart LCD module, 16 x 2, is interfaced to AT89S52 for digital read out. The Kiel Vision3, IDE, is utilized to develop firmware in embedded C. The system under investigation is calibrated to scientific unit and tested.