This paper presents a high-precision capacitance-to-digital converter (CDC) for displacement measurement in advanced industrial applications, based on a charge-balancing third-order delta–sigma modulator. To achieve high precision, this CDC employs a precision external resistive reference and a quartz-oscillator-based time reference instead of a reference capacitor. To minimize the error contribution of the CDC circuitry, various precision circuit techniques, such as chopping and auto-zeroing, are applied at both system and circuit level. Measurement results of the prototype realized in 0.35-μm CMOS technology show that the CDC achieves an rms resolution of 42 aF across a capacitance range from 6 to 22 pF, corresponding to an effective number of bits (ENOB) of 16.7 bit. The conversion time for one measurement is 10.5 ms, during which the CDC consumes 230 μA from a 3.3-V single supply. The measured thermal stability is within ±7.5 ppm/°C across a temperature range from 20 °C to 70 °C, which represents a significant improvement compared to the state of the art. After a two-point calibration, all ten measured samples from one batch show absolute accuracy below ±25 fF across the entire capacitance measurement range.