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A new configuration of Michelson fiber interferometer is proposed and demonstrated for refractive index (RI) and temperature sensing. The proposed configuration consists of a 2 × 2 3 dB coupler and a section of high birefringence (Hi-Bi) fiber. The Hi-Bi fiber is spliced to an output of the coupler, and its combining with the other output forms and the interference arms of the interferometer. For the spectral response of the proposed interferometer, the extinction ratio of an interference pattern corresponding to conventional Michelson fiber interferometer is modulated by a larger period induced by Birefringence in Hi-Bi fiber. This sensor shows a capacity for simultaneous measurement of liquid RI and temperature by detecting the fringe contrast variation and the wavelength shift, respectively.