A novel scheme of diode-pumped dual-frequency Nd:YAG green laser with large frequency difference is proposed in this paper. When a polarized beam splitter (PBS) is placed in resonant cavity of a diode-pumped intracavity KTP-ftequency-doubled Nd:YAG green laser, a new birefringent filter consisting of PBS and KTP is formed (i.e., PBS-KTP) to select single longitudinal mode. A diode-pumped two-cavity dual-frequency green laser with a common medium of Nd:YAG has been designed, each resonant cavity of which is enforced to operate in single longitudinal mode by means of the birefringent filter of PBS-KTP. The frequency difference of the dual-frequency Nd:YAG laser at 532-mn can be tuned in a range of 0 similar to 360GHz, and its stability can be achieved approximately 10(-6) by use of the Pound-Drever-Hall technique. Such a dual-frequency laser will be employed as an ideal light source of an absolute-distance interferometric system. The design principle is introduced briefly, the scheme and its feasibility of the dual-frequency laser are described and analyzed, respectively, and some preliminary results obtained experimentally are given.