The method that widely used for displacement test at present is to artificially transform objective spatial displacement to one-dimensional or two-dimensional displacement in local coordinate system. This not only damages the theoretical strictness of displacement test but also makes it impossible to fully use the superiority that GPS can simultaneously and accurately measure three-dimensional displacements in the agreement globe coordinate system (ITRF or WGS-84) in deformation analysis. In addition, errors can be caused in the process of displacement transformation, which may result in incorrect test result. To avoid the effect of displacement transformation error on the test result of displacement significance, this paper puts forward a new method— Deformation Error Ellipsoid Test Method , by which displacement significance is tested directly in ITRF or WGS-84 when GPS is used for deformation monitoring. The strict theoretical formulae for deformation error ellipsoid test and a realistic case of displacement test are given.