In this paper, a novel probe for displacement sensing will be introduced. It is based on a conventional GaAs cantilever, integrated with a Bragg grating as a photo-elastic strain sensor. The deflection of the cantilever is measured directly from the intensity modulation of the reflected light. The principle of the experimental setup and the sensor, as well as the theoretical investigation of the force and displacement sensitivity of the probe, is presented. Finite-element method simulations were performed to get the optimum sensor design. Transfer matrix method simulation of the waveguide grating have been described in detail. In order to enhance the sensitivity, different types of grating structures are discussed. Using this new design, it should be possible to achieve sensitivities, defined as the fractional change in detected optical power per unit displacement of the cantilever, as high as 10-4 Å-1 of cantilever deflection.