Due to insensitivity to the environmental disturbances, Fabry-Perot interferometers are suitable for displacement measurements under ordinary conditions. In the structure of folded Fabry-Perot interferometer, the results of the signal subdivision are affected by the optical parameters in the resonant cavity. In this paper, the analysis of the Fabry-Perot interferometer for the measurement of the micro-displacement and the long-distance are investigated. By considering the reflectance of the planar mirror and the intensity loss in the resonant cavity, the parameters of systematic optimization which are suitable for the measurement of the micro-displacement and the long-distance are proposed. The experimental and simulated results reveal that the intensity loss in the resonant cavity is 86% and the optimized reflectance of the planar mirror is 12%.