The effects of transverse strain on the wavelength shifts of surface-mounted fiber Bragg grating (FBG) sensors are investigated. A new FBG model including the concept of strain transmissibility coefficients along the longitudinal and transverse directions of the sensors is proposed. The finite element method is applied to obtain the strain transmissibility coefficients between the FBG sensor and surface of the base structure. The wavelength shifts of each FBG sensor are calculated with respect to the assumed thermal strain condition of the base structures; the estimated strains by the proposed FBG model are compared with the results from conventional FBG model. The numerical results show that the surface strains of the composite structure can be predicted well using the proposed FBG model, while the conventional FBG model results in a larger error when the transverse strain of the base structure is much larger than longitudinal strain of the base structure, as in composite structures under thermal loadings.