Liquid level measurement is critical in industrial production, energy storage, and maritime transport, where accuracy and reliability directly impact safety and efficiency. Traditional methods, including ultrasonic, magnetostrictive, and optical level gauges, suffer from limitations such as susceptibility to environmental interference, contact-based measurement unsuitable for corrosive media, and stringent installation requirements. A high-precision, non-contact X-band frequency-modulated continuous wave (FMCW) radar level gauge system is designed, specifically tailored for demanding applications such as LNG ship tanks. The operating principle of FMCW radar is detailed, demonstrating how the target distance is derived from the beat frequency signal generated by mixing the transmitted and received signals. The system is designed with key parameters including an operating bandwidth of 1.9 GHz (8.62–10.52 GHz) and a transmission power exceeding 5 dBm to achieve a high distance resolution, enabling a measurement accuracy of ± 2 mm at a maximum range of 50 m. The hardware architecture of the radar system is described in detail, comprising its key components, with a specific focus on elucidating the principle and implementation of the phase-locked loop (PLL) frequency source. Experimental validation conducted in a waveguide setup, using honeycomb panels as reflective targets, shows that the measurement deviations are consistently below 2 mm when compared to a laser rangefinder, confirming the system's high precision and practical viability.