This study proposes a Littrow-type self-aligned laser encoder system (LisaLENS) with double diffractions. The LisaLENS has simple optical paths, facilitating alignment and manufacture, and fewer optical components than current laser encoders. This study analyzes the theoretical measurement resolution of this system and verifies the feasibilities of its long- and short-range measurements through experiments. Experimental results show that the LisaLENS has a resolution of 5.5±1.4 nm. Thus, this design has wide applications in various fields, especially for monitoring the displacement and vibration of precision-motorized stages.