In order to achieve high-precision measurement of hydraulic engineering deformation,a set of deformation monitoring system based on PSD is designed. The laser lights are installed on the sites where prone to be deformed. Based on observation of real-time change of spot position on PSD surface,the micro displacement of the hydraulic engineering in the horizontal and vertical directions can be detected. The system processes the micro signal from PSD, and calculates the position of four-channel signals by single chip microcomputer. Then,a model combining genetic algorithm and LM-BP neural network method is applied to achieve the nonlinearity correction of PSD. The position results can be displayed on the digital tube and system interface. The monitoring system has realized the designed function in the indoor inspection laboratory simulating the environment of hydraulic engineering. In addition,as a new sensor with high resolution and simple signal processing,PSD can be widely applied for deformation monitoring of hydraulic engineering and replace the other monitoring equipments.