In this paper, a VCSEL-based oxygen sensor applied for real-time combustion optimization in furnaces is presented. A diffuse reflector instead of a spherical mirror is used to avoid alignment problems during thermal cycles the sensor is exposed to in the in-situ measurement. In spite of the signal loss, this concept proves to be suitable for measurements in the exhaust of a gas furnace even if severe condensation at the optic surfaces occurs. The optic cell has a background level in the order of 10 −5 in absorbance and is long-term stable. A real-time microcontroller-suited curve fitting algorithm is applied to further improve the long-term stable operation of the whole sensor, because a drift of the spectral background is compensated. Neither absolute wavelength scale, nor absolute wavelength difference between two measurement points is needed for concentration determination. Furthermore, the gas pressure can be simultaneously determined. Kalman filtering is also applied to reduce the concentration measurement noise without losing the reliability and fast response time of the sensor. The techniques applied in the sensor are not limited to oxygen sensing, but also can be applied for sensing of other gas molecules.