A temperature sensor based on polarization non-reciprocity (PNR) in fiber-optic Sagnac interferometer (FSI) can measure the temperature of one point in high precision. The phasic subtraction of two light beams was shifted while temperature field around the probe changed. Analyzing the temperature measuring theory of Sagnac fiber optic temperature sensor, a linear output model was established. The all digital signal detection was based on square-wave modulation and demodulation. An all digital signal detecting system using C8051F060 as its core was completed. It can maintain the phase relation of sampling signal and modulating signal. Sampling signal achieved by 16-bit A/D converter was computed in digital method to get the output of measuring temperature. This technique has the advantages of convenient realization and digital operation. The experimental data achieved by temperature experiments agree with theory well. The input and output of system achieve a linearity of 10-3. Discussion shows that this kind of temperature sensor can reach high precision.