The development of Fiber Bragg Grating (FBG) sensing technique has improved significantly especially in the sensor head design and real-time data acquisition technique. This paper presents the development of a simple and cost effective packaging technique that further enhances the performances of the FBG sensor. The packaged FBG sensor overcomes the nonuniform heat distribution of a bare FBG that causes eccentric response of FBG spectrum. Therefore, the packaged FBG sensor could be operated for a localized area with high temperature differential. The packaging also compensates the unwanted strain effect from the surrounding which makes temperature measurement become more accurate. The experimental works have been successfully carried out to demonstrate the system operation and the packaging functionalities. The temperature sensitivity coefficient of the bare FBG sensor measured in experiment is 10.05 pm/°C, while the packaged fiber sensor is 10.09 pm/°C, which are expected from the design.