Signal deterioration due to I/Q mismatch may happen in all quadrature direct-conversion receivers, destroying the orthogonality of the demodulated signal and causing a mirrored signal to appear superimposed to the desired signal. This effect is even more pronounced for radar systems over 100 GHz since they are sensitive to small fabrication errors. In addition, for ac-coupled interferometric radars measuring slow movements, coupling distortion is present. In this paper, these issues were analyzed for interferometric radars and then resolved using a novel phase imbalance correction method on a 125 GHz radar. The effectiveness of the proposed solution was verified experimentally. A high sensitivity was demonstrated by successfully measuring a 95-nm sinusoidal movement.