A spectral demodulation algorithm based on Pisarenko sine wave recovery method for frequency-division-multiplexed (FDM) fiber-optic Fizeau strain sensor networks is proposed, which is used to effectively reduce the cross talk between two adjacent sensors, and thus enhance the network multiplexing capability. Based on principle of multi-beam interferomety, demodulation model for such networks is built up and experiments are carried out to study the cross talk of two fiber-optic Fizeau sensors. The experimental results show that a strain accuracy better than ±10 με has been achieved even when the cavity length difference is 100 μm approximately, while it is about 500 μm for fast Fourier transform. It demonstrates that the multiplexing capability of the FDM fiber-optic Fizeau sensor networks can be improved by 5 times. Hence, with a low cross talk and strong multiplexing capality, the method can be widely used in quasi-distributed high multiplexing capability optical sensing systems.