Intrinsic performance limits of noncontacting fiber lever displacement measuring systems are quantitatively described. Generalized relationships linking displacement detection limit, frequency response, dynamic range, linearity, and working distance to fiber diameter, illumination irradiance and coupling angle, photodetector characteristics, and reflection and transmission losses were obtained by analysis and confirmed by measurement. Both procedures showed performance limits to be functions of the square root of the flux density coupled into the target-illuminating fiber(s) by the electroluminescent source. Displacement detection and bandwidth limits achievable with tungsten or LED sources were in the 2 x 10(-11) to 2 x 10(-12) [equation] and MHz, range respectively. A basis for optimizing levers for different applications and determination of intrinsic performance limits is provided.