A novel two‐parameter sensor is proposed based on the abrupt taper and micro‐arc Michelson interferometer (MI) in single‐mode fiber. When there is a regular change in the liquid level or temperature, the phase difference changes, and the spectral intensity or wavelength of the interfering valleys of this sensor is directionally shifted. This study enriches the construction of MI and provides a new perspective on liquid level measurement. We experimentally explored the sensor's sensing performance over temperature and liquid level: this sensor's temperature sensitivity and liquid level sensitivity were up to 62.9 pm/°C and 0.2896 dB/mm, respectively. In addition, this sensor is characterized by compactness, simplicity, low cost, and high reliability, and it is suitable for measurement of liquid level and temperature, expanding the application field of MI.