Magnetic bearings use electromagnetic force to support the rotating shaft without any mechanical contact and actively control shaft vibration; hence, there is no mechanical friction and wear due to contact during the operation, and it has a semi-permanent lifespan. Because magnetic bearings are unstable by themselves, a gap sensor is necessary to stably control the position of objects. However, there is a limit to the improvement in control performance because the sensor is installed on one side of the bearing and is not aligned with the electromagnet. This paper presents a newly developed collocated eddy-current PCB displacement sensor for magnetic bearings. The PCB sensor is designed and built to install between the poles of a magnetic bearing and to minimize the electromagnetic interference. A sensor calibration test is performed to evaluate the sensitivity and noise of the collocated PCB sensor. In addition, the control performance of the collocated PCB sensor is evaluated by measuring the closed-loop sensitivity function of a 1 DOF magnetic suspension test rig. The collocated PCB sensor has noise within ±1 μm and excellent vibration suppression performance.