Phase Generated Carrier (PGC) demodulation algorithm is currently an important demodulation algorithm in the field of fiber optic interferometric sensing. Aiming at the problem of light intensity perturbation and modulation depth (C) affecting the accuracy of signal demodulation in the current PGC demodulation algorithm, an improved PGC demodulation algorithm (PGC-Ameliorated) is proposed and a vibration sensing system based on Distributed Feedback (DFB) lasers is built for experimental verification. The experimental results show that when the frequency of the measured vibration signal is 800Hz, the signal-to-noise ratio of the algorithm is 57dB, which is better than that of Differential and Cross Multiplying (DCM) algorithm and Arctan algorithm. At different values of light intensity, the amplitude of the demodulated signal fluctuates in the range of ±0.02 rad; at different values of C, the algorithm has a minimum total harmonic distortion of 0.61% and a maximum signal-to-noise ratio of 25.9 dB, which provides lower total harmonic distortion and higher signal-to-noise ratio than the DCM algorithm and the Arctan algorithm.