High-speed rotating blade vibration monitoring is of great significance for the safe operation of turbomachinery. Blade Tip Timing (BTT) is considered a promising technology in the field of blade vibration monitoring. The BTT signal analysis has the following problem, the displacement offset was caused by speed variation which affected the accuracy of the blade vibration parameter identification. Owing to the under-sampled characteristics of the BTT signals and multiple sensor data are required to identify the parameters. The accurate extraction of blade vibration characteristics is challenging. Thus, a vibration analysis method is proposed based on Displacement Offset Decreased and Compressed Sensing (DOD-CS). Firstly, the BTT signal pairwise is subtracted to reduce the impact of the displacement offset, and based on the subtractive results, a basis function is constructed to rebuild the dictionary matrix of the compressed sensing method. Then, we solved the signal sparse representation equation and obtained the spectrum estimation result, that is, the structure vibration parameters. The analysis of simulation data shows that the parameter identification accuracy of the DOD-CS method is higher than that of the OMP-CS (Orthogonal Matching Pursuit and Compressed Sensing) method, and the identification errors of frequency and amplitude are within 1% and 5%, respectively. The experimental results confirm the feasibility of the proposed method in identifying vibration parameters. Compared with existing methods, the innovation of the proposed method is that it eliminates the influence of displacement offset on the accuracy of parameter identification. For under-sampled signals, only two sensor data information are needed to complete spectrum estimation and parameter identification.