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Fiber Bragg gratings (FBGs) can be used as sensors to monitor stress and test temperature during the processing and handling of optical fiber. As the FBG experiences a combination of mechanical and thermal loading, the return Bragg wavelength will shift proportionately to the magnitude of the load. This paper discusses the use of these sensors in quantifying induced stress on fiber during the packaging of a dispersion-compensating module (DCM) and the ensuing environmental exposure. There are two potential fiber-failure modes for fiber wound in DCMs, namely microbend-induced attenuation and fiber failure from fatigue. The ability to quantify fiber stress provides a useful feedback tool in the design phase of these modules that can aid in reducing the risk of mechanical and optical failure modes. A practical characterization process was developed to decouple thermal and stress effects on FBGs based on results from current literature and from this study. Uncoated Bragg sensors were found to respond linearly between -40 to 80°C. Gratings with a protective polymer recoat departed from the linear behavior of the uncoated gratings below -5°C. It was determined that the recoat material places less than 25 MPa (3.6 klbf/in2) of axial compression on the fiber at -40°C. Four gratings with different Bragg wavelengths were spliced into 10 km of fiber and wound into a DCM. The wind-induced stress on all four gratings quickly relaxed. The module was then thermal cycled between -40 and +75°C. The overall stress on each grating was acceptably low for reliability purposes. The maximum stress of 17 MPa (2.5 klbf/in2) was observed at the lowest temperature.