Linear displacement measurement technology plays an essential role in the precision manufacturing sector, ensuring the accuracy of machining processes. Compared with other linear displacement measurement technologies, grating-based linear displacement measurement techniques offer high measurement precision, strong resistance to interference, and the ease of implementing large-scale measurements, making it a current research focus. To advance the study of grating linear displacement measurement technology, this paper initially analyzes the measurement principles of three types of grating linear displacement measurement systems. It reviews the research progress in these three areas and summarizes the strengths and limitations of existing studies: the grating linear displacement measurement technology based on Moire fringes is constrained by the diffraction limit, which hinders further improvements in resolution; the technology based on diffraction gratings struggles with absolute position measurement; and the technology based on image processing algorithms suffers from low integration and limited measurement range. This paper prospects the future development directions for grating linear displacement measurement technology, providing a foundation for further research in this field.