This study develops a fiber-optic-based technique for in situ characterization of direction-dependent cure-induced shrinkage in thermoset fiber-reinforced composites. A procedure is established to embed fiber Bragg grating (FBG) sensors in composite out-of-plane directions and to measure key through-thickness chemical cure shrinkage directly under practical curing conditions. First, sensitivity of the proposed method is evaluated through comparison with a standard technique (i.e. thermo-mechanical analysis (TMA)), and the effect of sensor tail length on measurement sensitivity is discussed considering shear-lag effect. Next, combined with double-sided vacuum bagging and demolding during curing, FBG sensors embedded in through-thickness and in-plane directions clarify direction-dependent cure-induced shrinkage in autoclaved unidirectional carbon/epoxy. Finally, the feasibility of characterizing through-thickness shear strain, which is important in complex-shaped parts but cannot be measured using conventional techniques, is confirmed. The developed technique will be a powerful tool for evaluating cure shrinkage in complex-shaped parts and for validating process-simulation tools based on internal strain.