Fiber Bragg grating (FBG) sensors based on the wavelength division multiplexing technology are ideally suited for structural health monitoring. In many applications, it is desirable to form several arrays of optical fiber sensors to monitor the response of structures. In the present study, we constructed an improved FBG sensor system using a wavelength-swept fiber laser which exhibits high output power for several sensor arrays. A fiber cavity etalon was also fabricated for the calibration of the nonlinear output wavelength of a laser and for scaling the information in the wavelength domain for signal processing. The constructed FBG sensor system with the fiber cavity etalon and a reference FBG was applied for strain measurements of a laminated composite panel under axial compressive loading. In order to monitor the structural strain in real time, the signal-processing program was constructed using LabVIEW software for storing and visualizing data from the FBG sensors. Experiments showed that the constructed FBG sensor system and the real-time signal-processing program could successfully monitor the strain of composite laminates. This improved FBG sensor system could be useful for large structures which require a large number of sensor arrays.