Speckle patterns are complex intensity distributions, which occur when an optically rough surface is illuminated with a coherent light. The speckle phenomenon was known to be troublesome when the laser was first introduced, but later it was discovered to be an opportunity for various measurements. This research investigates the application of speckle pattern correlation to absolute and relative displacement measurement. The goal is to develop a displacement scale that is non-contact, fast, low cost, and can be used on mechanical machinery as the metrology subsystem. For absolute displacement measurement, this research develops a database of speckle patterns over the range of measurement. Each database pattern is associated with a specific sample position. For an unknown sample position, the maximum correlation of the speckle pattern at that position with the database patterns reveals the position of the sample. This research successfully performs a two dimensional displacement measurement with 1 µm resolution over 20 by 20 µm area. The large number of required database patterns for this technique limits the measurement range, especially in two dimensions. The sensitivity of the system to environmental disturbances restricts the application of this method to industrial processes. In order to overcome these shortcomings, this research develops an innovative displacement measurement technique based on speckle pattern correlation. It uses the correlation between a red and a green speckle pattern for relative displacement measurement.