Fiber Bragg grating (FBG) sensors are one of the most exciting developments in the fields of fiber-optic sensors in recent years. One of the problems in using grating sensors is the discrimination of temperature and strain responses (cross-sensitivity effect between temperature and strain), because in most real-world applications both of these quantities will be acting on the sensor elements. Another problem is how to measure a small Bragg wavelength shift accurately. This article presents a comprehensive and systematic overview of discrimination measurement methods and demodulation techniques for FBG sensors. It is anticipated that FBG sensors will be commercialized and widely applied in practice in the near future due to the maturity of economical production of FBGs and the availability of cost effective measurement and demodulation techniques. Recent research work about a differential FBG sensor for simultaneous measurement of down-hole high pressure and temperature and the corresponding demodulation techniques are also introduced in this paper.