Abstract: Wavelengthencoded signal demodulation is one of the key techniques for the fiber Bragg grating sensing systems to enter into a practicable step. This paper discusses the general principle in demodulation of FBG sensing signal. The mechanism of operation, characteristics and function of commonly used demodulating methods are analyzed.Moreover,the main technical problems and development direction in signal demodulation of FBG are summarized. This paper provides foundation for the design of the demodulation based on FBG sensor system.