The displacement measured by a confocal probe based on time difference method is an one-to-one mapping to the time difference between the two peaks in a photo-electric signal. In order to calculate the time difference accurately, the characteristics of photo-electric signal output from an improved probe was analyzed and then the defects in the current signal processing method were pointed out.A processing method named similar pattern analysis was persented to calculate the time interval between the two peaks. Experimental data show that in the data acquisition system with sampling frequency of 2 MHz, the standard deviation of time difference by using the similar pattern analysis is 0.33 μs,which is better than 3.37 μs by using the maximum value method. With the similar pattern analysis, it is easy to implement the signal pre-processing. The calculated results are accurate and stable and are not influenced by the changes of laser intensity and ambient light interference.