A novel capacitance‐to‐digital converter (CDC) that performs an accurate measurement of the capacitance of a leaky capacitive sensor is presented. The conversion technique of this CDC is novel, which helps to achieve the highest interference rejection compared with the exiting CDC topologies. The digital output from the CDC is directly proportional to the sensor capacitance, Cx. It provides an accurate output even in the presence of a parasitic leakage resistance, Rp, parallel to the sensor. A prototype CDC has been developed and tested. Worst‐case error was found to be 0.1%. The CDC employs a sinusoidal excitation for the sensor, and is suitable for a variety of applications such as proximity or touch detection, detection of ice, level sensing, humidity measurement, etc. This CDC is well suited for applications where the conventional schemes fail to work due to the extreme interference from other sources, e.g. power line.