Synthetic-heterodyne demodulation is a useful technique for dynamic displacement and velocity detection in interferometric sensors, as it can provide an output signal that is immune to interferometric drift. With the advent of cost-effective, high-speed real-time signal-processing systems and software, processing of the complex signals encountered in interferometry has become more feasible. In synthetic heterodyne, to obtain the actual dynamic displacement or vibration of the object under test requires knowledge of the interferometer visibility and also the argument of two Bessel functions. In this paper, a method is described for determining the former and setting the Bessel function argument to a set value, which ensures maximum sensitivity. Conventional synthetic-heterodyne demodulation requires the use of two in-phase local oscillators; however, the relative phase of these oscillators relative to the interferometric signal is unknown. It is shown that, by using two additional quadrature local oscillators, a demodulated signal can be obtained that is independent of this phase difference. The experimental interferometer is aMichelson configuration using a visible single-mode laser, whose current is sinusoidally modulated at a frequency of 20 kHz. The detected interferometer output is acquired using a 250 kHz analog-to-digital converter and processed in real time. The system is used to measure the displacement sensitivity frequency response and linearity of a piezoelectric mirror shifter over a range of 500 Hz to 10 kHz. The experimental results show good agreement with two data-obtained independent techniques: the signal coincidence and denominated n-commuted Pernick method. (C) 2015 Optical Society of America