In this paper, a novel self-mixing grating interferometer (SMGI) with dual laser diodes (LDs) is proposed for 2-D dynamic displacement measurement. The light beams emitted from the LDs are incident onto a reflection grating with ±1st order auto-collimation diffraction angles and then diffracted back into the lasers, respectively, which can cause self-mixing interference effect in each LD. Theoretical analysis on the SMGI signals corresponding to 2-D displacement is presented and verified with the experimental observations. Measurement results of 2-D dynamic displacement demonstrate that the proposed system can achieve the measurement resolution better than 10 nm. The proposed SMGI sensing system has the advantages of high stability, compact mechanical structure, and relatively straightforward operation.