The invention discloses a low-coherence interferometric demodulation method based on spectrum nonlinear effect dispersion compensation. The method comprises the following steps: step 1, achieving discrete Fourier transform of interference fringe signals to obtain the magnitude spectrum and the phase spectrum under the discrete frequency domain; step 2, setting a threshold H, taking a region of which the amplitude is larger than H, except for the low-frequency part, as the selected discrete frequency band, calculating wave numbers corresponding to all points in the frequency band, and transforming the phase spectrum from the discrete frequency domain to the wave number domain; step 3, selecting the wave number corresponding to the maximum amplitude in the magnitude spectrum, within the wave number band in which the optical spectrum of a light source is distributed, as the specific wave number, carrying out phase unwrapping in the wave number band, calculating the interference level of the specific wave number, reconstructing the absolute phase of the specific wave number, which directly reflects the range information, according to the relative phase value and the interference level of the specific wave number. The low-coherence interferometric demodulation method realizes high-precision distance demodulation and is suitable for light sources with any wideband.