The invention relates to a high-precision sea surface height extracting method of a radar altimeter through small incidence angle interference. A small incidence angle and short base line interference processing mode is adopted to carry out synchronous interference receiving on echo signals through a main channel and an auxiliary channel, pre-filtering, two-dimensional image processing, image registration, interference processing, multi-vision processing, phase-position denoising filtering, phase position unwinding, water recognizing, classifying, height conversion and geometric correcting processing are carried out on received data in sequence, and a water area height value is obtained. According to the method, the swath width is large, the temporal-spatial resolution is high, the method can be applied to observation of the ocean current, ocean tide, vortex and other meso and micro scale phenomena in the ocean and the observation of the coastal water, the sea ice shelf and the land hydrology.