A new algorithm for modulating a PZT stack using a sinewave signal instead of a saw-tooth signal was developed in order to resolve the flyback problem in a PZT driver. An improved synthetic heterodyne demodulator circuit was designed and arranged to interrogate the output signal from an interferometric sensor with a sinewave modulation (phase-generated carrier). The depth of modulation, or a gain amplifier in the circuit design, was adjusted such that the standard heterodyne signal could be formed. The result is a conventional PM-modulated carrier that can be demodulated using standard techniques, followed by a lock-in amplifier or a phase meter, to recover the phase shift in the sensing information. Implementing it into a path-matching differential interferometer for the signal modulation validates this new method. As compared to the conventional technique, modulating the PZT stack in a saw-tooth signal, this technique supplies a wider modulated frequency and, therefore, a wider frequency response in a sensing system. Finally, the new synthetic heterodyne is applied to a differential optical fiber refractometer for measuring the refractive index change. A lock-in amplifier is chosen as the demodulator to extract the phase shift. Therefore, the resolution of this sensing system is 7.52/spl times/10/sup -7/ refractive index unit for a 120-/spl mu/m length of the sensing cavity.