Terrestrial laser scanning (TLS) is a widely used remote sensing technique which can produce very dense point cloud data very promptly and is particularly suited for surface deformation monitoring. Deformation magnitude is typically estimated by comparing TLS scans over the same area but at different time epochs of interest. However, there is an issue related to such a method, which is not clear that whether the difference between two successive surveys results from the surface deformation. Hence, it is vital to determine the minimum detectable deformation (MDD) by a TLS device with a given registration and point cloud error level. In this paper, the MDD is determined based on the computation of the point cloud error entropy. The performance of the proposed method is extensively evaluated numerically using simulated plane board deformation point clouds under a range of distances and incidence angles. This proposed method was also successfully applied to deformation monitoring of one landslide test site located in the Wuhan University of Technology. The experimental results demonstrate that the theoretical MDD has a good match with the actual deformation, and the deformation greater than MDD can be accurately detected by the TLS device.