Abstract: A novel signal processing method based on windowed Fourier transform(WFT) was presented in a phase detecting surface plasmon resonance(SPR) system using spectral interference. The principle of this phase retrieval algorithm was introduced detailedly. The main factors which can affect the precision was analyzed, such as the width of the window, sample frequency, threshold value etc. Calculations indicated that, it can achieve a desired detection limit only by picking up the appropriate parameters. From the achieved spectral phase difference, the detection limit we obtained is 3.89410-7 RIU, while the theoretical value is 3.90510-7 RIU, the precision of this algorithm is 0.28%. It is seen that the algorithm presents a higher precision. In addition, the algorithm is mathematically simple and it can be readily combined with commonly used data analysis methods.