A novel compensation technique for polarization-modulated optical fiber sensors isproposed, and an optical fiber temperature sensor system is constructed. In the sensor head, a polarization beam splitter is used not only as a polarizer, but also as an analyzer,and thereflective structure is used so that the sensor head is simple, reliable and practical. Theexperimental results show that this compensation technique can stabilize the sensor outputwith a high accuracy and better long-term stability.