We propose and demonstrate a novel optical-fiber micro-displacement sensor based on surface plasmon resonance (SPR) by fabricating a Kretschmann configuration on graded-index multimode fiber (GIMMF). We employ a single-mode fiber to change the radial position of the incident beam as the displacement. In the GIMMF, the angle between the light beam and fiber axis, which is closely related to the resonance angle, is changed by the displacement; thus, the resonance wavelength of the fiber SPR shifts. This micro-displacement fiber sensor has a wide detection range of 0-25 μm, a high sensitivity with maximum up to 10.32 nm/μm, and a nanometer resolution with minimum to 2 nm, which transcends almost all of other optical-fiber micro-displacement sensors. In addition, we also research that increasing the fiber polishing angle or medium refractive index can improve the sensitivity. This micro-displacement sensor will have a great significance in many industrial applications and provide a neoteric, rapid, and accurate optical measurement method in micro-displacement.