Er‐activated fiber lasers are critical for many significant applications, including fiber communication, gas sensing, lidar and military. Although the design of suitable fiber materials has improved the performance of Er‐activated fiber lasers, extension of their operation wavebands still remains a significant challenge. Here, a compact all‐fiber laser is proposed and demonstrated, which can support lasing beyond 1630 nm, based on an Er‐activated hybridized glass fiber. The collaborative theoretical analysis and experimental characterization indicate that various distinct structure units can form in the hybridized fiber. This leads to the notable inhomogeneous spectral broadening. By using this hybridized fiber, a tunable fiber laser device is constructed and the wavelength can be rationally tuned in the range from 1609 to 1631 nm by mechanically stretching the fiber Bragg gratings (FBGs) manufactured by the point‐by‐point femtosecond laser inscription. Furthermore, a new fiber sensor system based on this seldom exploration waveband is built and efficient ethylene detection is demonstrated. The results highlight that rational hybridization mediated short‐ and medium‐structure modification strategy, demonstrated here in Er‐activated fiber laser, can be extended to other rare‐earth glass fiber systems for the exploration of fiber devices at new wavebands.