We present a sensor for the atomic force microscope (AFM) where a silicon cantilever is micromachined into the shape of interdigitated fingers that form a diffraction grating. When detecting a force, alternating fingers are displaced while remaining fingers are held fixed. This creates a phase sensitive diffraction grating, allowing the cantilever displacement to be determined by measuring the intensity of diffracted modes. This cantilever can be used with a standard AFM without modification while achieving the sensitivity of the interferometer and maintaining the simplicity of the optical lever. Since optical interference occurs between alternating fingers that are fabricated on the cantilever, laser intensity rather than position can be measured by crudely positioning a photodiode. We estimate that the rms noise of this sensor in a 10 hz–1 kHz bandwidth is ∼0.02 A˚ and present images of graphite with atomic resolution. ©1996 American Institute of Physics.