A correlation function peak finding method for an image correlation displacement sensing system is provided. The method may include capturing a reference image and a displaced image, and searching for an initial peak correlation function value point (CFVP) with pixel-level resolution based on correlating the reference image and displaced images at a plurality of offset positions. Then a complete set of CFVPs may be determined at each offset position in an analysis region surrounding the initial peak CFVP. Then a preliminary correlation function peak location is estimated with sub-pixel resolution, based on CFVPs included in the analysis region. Finally, curve-fitting operations are performed to estimate a final correlation function peak location with sub-pixel accuracy, wherein the curve-fitting operations apply a windowing function and/or a set of weighting factors that is/are located with sub-pixel resolution based on the preliminary sub-pixel correlation function peak location.