A straightness interferometer utilizing a broad-band light source and real-time compensation method is introduced in this thesis. Where the interference pattern which is modulated by an envelope function undergoes a shifting as the Wolaston prism of the interferometer experiences a lateral displacement, the compensation method senses the displacement by driving the prism back to the place of restoring the pattern. A setup, which is with a measurement resolution and sensitivity of 0.4nm and 36.6o/μm, respectively, for realizing the interferometer is constructed and demonstrated. The experimental results from the uses of the setup reveal a measurement stability of 0.08μm, validate the interferometer, and confirm the interferometer’s applicability of straightness measurements and advantage of extensible working distance.