In this paper, a fiber optic health monitoring system was proposed and applied to the sensing of strain and fracture behaviors of composites. In order to detect strain and fracture signals simultaneously, we combined a white light interferometer with an intensity demodulator in an EFPI (extrinsic Fabry-Perot interferometer) sensor. Both a broadband light source and a narrowband filter such as an FBG (fiber Bragg grating) and a Fabry-Perot filter were coupled in an EFPI sensor imbedded in composite specimens. This paper compares the performance of two fracture sensing units with differing intensity demodulating filters and describes the implementation of the time-frequency analysis of STFT (short time Fourier transform) for the detection of the fracture signals like matrix cracking. From the test of tensile load monitoring using the optical fiber sensor system, the measured strain agreed with the value of an electric strain gage, and the fracture sensing unit could detect matrix cracking with high sensitivity to recognize the onset of the micro-crack fracture signals.