This study integrated a fiber loop manufactured by using commercial fiber (SMF-28, Corning) and a fiber Bragg grating (FBG) to form a fiber optic sensor that could simultaneously measure displacement and temperature. The fiber loop was placed in a thermoelectric cooling module with FBG affixed to the module, and, consequently, the center wavelength displacement of FBG was limited by only the effects of temperature change. Displacement and temperature were determined by measuring changes in the transmission of optical power and shifts in Bragg wavelength. This study provides a simple and economical method to measure displacement and temperature simultaneously.