Digital image correlation (DIC) method using iterative least squares algorithm (ILS) for displacement field measurement and pointwise least squares algorithm (PLS) for strain field measurement is proposed in this paper. A more general and practical intensity change model is employed with consideration of the linear intensity change of the deformed image, followed by an iterative least squares algorithm for calculating displacement field with sub-pixel accuracy. The concept of correlation function is not used in the ILS method, even though we prove that the algorithm is actually equivalent to the optimization of the sum of squared difference correlation function using improved Newton–Raphson method. Besides, different from the conventional strain estimation approaches based on smoothing the displacement fields first and followed by differentiation of the smoothed displacement fields, a simple yet effective PLS algorithm is proposed for extracting strain fields from the computed displacement fields. The effectiveness and accuracy of the proposed techniques is verified through numerical simulation experiments. A practical application of the algorithms to residual plastic deformation field measurement of GH4169 alloy subjected to tensile fatigue is also presented.