In this paper, a detailed theoretical study on the characteristics of cone-shaped inwall capillary-based microsphere resonators is described and demonstrated for sensing applications. The maximum, minimum, slope, contrast, and width of the Fano resonance are analyzed. As the transmission coefficient of the capillary resonator increases, the absolute value of the slope of Fano resonances increases to reach its maximum, which is useful for sensors with an ultra-high sensitivity. There occurs another phenomenon of electromagnetically induced transparency when the reflectivity at the capillary–environment interface is close to 100%. We also experimentally demonstrated its capability for temperature and refractive index sensing, with a sensitivity of 10.9 pm/°C and 431 dB/RIU based on the Fano resonance and the Lorentzian line shape, respectively.