Abstract: In a signal processing apparatus and method, original two-phase signals each having the possibility of amplitude fluctuation are received by an input portion. From the original two-phase signals received by the input portion, new two-phase signals are formed by a signal processing portion. The signal processing portion forms an intermediate stage two-phase signal and a phase component eliminated signal having the phase components of the original signals eliminated therefrom in parallel from the original two-phase signals, and eliminates the fluctuation component of amplitude by the offsetting process of respective ones of the two-phase signals and the phase component eliminated signal to thereby form the new two-phase signals. The new two-phase signals have a predetermined phase relation with the original two-phase signals. The new two-phase signals are output from an output portion. This specification also discloses a displacement detecting apparatus using such a signal processing apparatus.