This paper presents a novel reading algorithm for an ironless inductive position sensor which exhibits immunity to single-frequency interference (both for high and low frequency signals). This algorithm is based on the three-parameter sine fitting, whose performances have been enhanced with proper windowing function design. The proposed algorithm exhibits high precision and suitability for real-time implementation. The performances of the new algorithm are tested on simulated and measured signals and the results are discussed in detail. The algorithm has been finally tested and validated on a real-time target.