We describe a novel interferometer which enables the absolute measurement of distances between two objects. This system was developed for integration into an alignment system for an x-ray lithography tool but also has many other potential applications. The absolute distance measuring interferometer system consists of two frequency-stabilized lasers which probe the resonances of a high-finesse, Fabry-Perot (FP) interferometer. The two lasers are independently locked to adjacent resonant peaks of the FP cavity transmission spectrum. The frequency difference between two adjacent longitudinal modes of the cavity is known as the free spectral range (FSR) and is inversely related to the optical path length of the cavity. The FSR of the cavity is measured by analyzing the frequency content of the mixed optical signal from both lasers with a spectrum analyzer. This approach provides a real-time measurement of the FSR and directly measures the absolute optical path between the two cavity mirrors. We have successfully constructed a working prototype system and measured the FSR of an 8.3-cm-long, high-finesse, optical cavity to within 5 Hz, which translates to a resolution of 2.3 Angstrom. We present an overview of the program, the latest experimental results, and the status of its application to an x-ray stepper.