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In this letter, we propose and demonstrate a highly sensitive hydrostatic-pressure sensor based on a dual-polarization fiber grating laser. The sensor is fabricated by embedding such a laser into a polymer with a steel rod. Due to the significant difference in elastic property, a nonuniform stress field over the package is induced by the applied pressure and an additional intracavity birefringence is produced. The amplitude of the pressure can be measured by monitoring the beat frequency between the orthogonal polarization modes. The sensitivity reaches 0.217 GHz/MPa, 108.5 times higher than that of a bare fiber grating laser. Considering the fluctuation of the beat frequency of 0.3 MHz, the resolution of the sensor is about 1.4 kPa, within the range of 0-13 MPa.