This thesis is focused on the design of the diffraction grating interferometer of large equivalent wavelength for machined surface flatness testing. Two transmission diffraction gratings are used for illuminating an object with two beams at different angles of incidence. The generated interference pattern has a large equivalent wavelength, depending on the angles of incidence. The suggested design minimizes the unnecessary diffraction rays and the systematic errors by the diffraction gratings. For this purpose, the stray light and error removal parts are designed using a polarized beam splitter, a beam splitter and a prism. It also has advantage of quite large working distance and easy alignment. For improved accuracy, two efforts are applied. First, phase shifting algorithm is adopted. Second, new algorithm is suggested and proved to calibrate the equivalent wavelength error from part defocus. Experimental results of mirror surface and machined surface testing verify the measurement system.