The transverse flux sensor (TFS) is a new type of sensor designed for rotor radial displacement measurement. Compared with conventional eddy current or inductive sensors, relying on its unique probe design, TFS has the advantages of high costefficiency, high accuracy, high sensitivity and ultracompact structure. Through theoretical analysis, the factors influencing the sensitivity of the sensor are researched. With establishing the finite element model, the key points of the sensor probe PCB design are clarified with simulation, and then the design rules applied to TFS are summarized according to the simulation results. The experiment circuit was designed and optimized, the experiment platform was built, and the performance test of the sensor was completed. Experiment results show that the sensor has good sensitivity, linearity and very low XY coupling. The TFS was successfully applied to the rotor displacement measurement of an active magnetic bearing system, and a stable levitation at 12 000 r/min was achieved.