In this paper, a development of an inductive position sensor is described. The sensor is similar to a radial magnetic bearing in that the sensor stator is shaped like a heteropolar magnetic bearing and is driven by a switching amplifier. A demodulation filter extracts the gap information from the switching current ripples. A prototype sensor exhibits the resolution of $0.43mum$ and the dynamic bandwidth of about 800Hz. The dynamic performance can be improved by increasing the switching frequency. However, the eddy current effects become noticeable at high switching frequency, thus limiting the improvement of the bandwidth.