A novel all-fiber sensing configuration for decoupling measurement of temperature and strain based on the twin core fiber (TCF) with an in-line embedded fiber Bragg grating (FBG) is proposed. A series of TCF filters with different lengths are fabricated experimentally, and the relationship between the free spectral range (FSR) and the fiber length of these filters is measured and analyzed, which are in agreement with the theory. It is found during the experiment that the TCF and FBG have different spectral responses for the changing strain and temperature. Optical spectrum analyzer (OSA) is used to monitor the wavelength at the bottom of the TCF transmitted spectrum and the wavelength drift of the fiber grating transmitted spectrum. The sensor tested has favorable repeatability for the responses of strain and temperature, and has a lower wavelength error compared with the spectrometer used in experiment. Withing a spectrometer having a wavelength distinguishability of 0.01 nm, the proposed all-fiber sensor can reach a distinguishability of 4.3048 με for stress and 0.4562 °C for temperature.