This paper presents the development of a cost-effective precision fiber Bragg grating (FBG) interrogation system using long-wavelength vertical-cavity surface-emitting laser (VCSEL). Tuning properties of a long-wavelength VCSEL have been studied experimentally. An approximately quadratic dependence of its wavelength on the injection current has been observed. The overall design and key operations of this system including intensity normalization, peak detection, and quadratic curve fitting are introduced in detail. The results show that the system achieves an accuracy of 1.2 pm with a tuning range of 3 nm and a tuning rate of 1 kHz. It is demonstrated that this system is practical and effective by applied in the FBG transformer temperature monitoring.