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This paper reports on a novel approach of using magnetic shape memory (MSM) alloys as smart materials in mechanical sensing. The presented concept enables the measurement of tensile strain. The underlying sensor mechanism is based on the reorientation of the martensite variants of the tetragonal unit cell of the MSM alloy (MSMA) which can be induced by either a magnetic field or a mechanical stress. In the novel concept, a magnetic bias field exerts a restoring force opposing the externally applied mechanical stress. The magnetic stray field at the rim of an MSMA sample, measured using a conventional Hall sensor, is used as the sensor signal. The operating principle was experimentally verified using a custom-made tensile test setup. A linear dependence of the magnetic flux density of the stray field on the mechanical strain was observed.