This article proposes a digital image correlation (DIC) strain measurement method based on a finite element (FE) algorithm. A two-step digital image correlation is presented. In the first step, the gradient-based subpixels technique is used to search the displacements of a region of interest of the specimen, and then the strain fields are obtained by utilizing the finite element method in the second step. Both simulation and experiment processing, including tensile strain deformation, show that the proposed method can achieve nearly the same accuracy as the cubic spline interpolation method in most cases and higher accuracy in some cases, such as the simulations of uniaxial tension with and without noise. The results show that it also has a good noise-robustness. Finally, this method is used in the uniaxial tensile testing for Dahurian Larch wood specimens with or without a hole, and the obtained strain values are close to the results which were obtained from the strain gauge and the cubic spline interpolation method.