This paper presents a low-cost interface circuit for lossy capacitive sensors. Most of the capacitive sensors are lossy in nature, where the resistance value of the sensor significantly varies along with the capacitance value. Accurate measurement of those values of a lossy capacitive sensor is a challenging task. This paper deals with the development of an electronic interface circuit for such a capacitive sensor. The circuit is based on the measurement of quadrature and in-phase components of the signal. To extract the actual value of the capacitance and the resistance, an average of the quadrature and the in-phase components of output is required. This is implemented using a microcontroller and provides flexibility in averaging (e.g., adjustable length of data to be processed). A PCB of the circuit has been fabricated and tested in the laboratory using capacitors and resistors with known values. The accuracy of the circuit was better than 0.6% and −2.2% for the measurement of capacitance and resistance, respectively. Also, the circuit is highly linear (FS nonlinearity of 0.32%) for a wide range of capacitance measurement (162 pF–3.680 nF). To confirm the effectiveness of the circuit, it was interfaced to a lossy capacitive humidity sensor and another capacitive transducer to measure the dielectric constants of edible oils. The results were compared with a precision impedance analyzer (Agilent 4294A); the maximum relative error was noted as ±1.6% in the measurement of permittivity values of edible oil. The prototype developed has the option to easily adjust the sensitivity and operating range, depending on the application.