This paper focused on high-precision demodulation of wavelength shift of FBG sensor. Fiber tunable F-P filer was used as a demodulation method. 32-bit embedded processor ARM9-S3C2440 chip was used as the main controller and simulated annealing algorithm was realized on ARM to demodulate wavelength signal. Simulation results show that the simulated annealing algorithm is reliable to process analog signals on ARM chip and significant performance is achieved such as saving bandwidth,increasing the amounts of reusable fiber grating sensors in sensor system and speeding up data processing. This paper focuses on high-precision demodulation of wavelength shift of FBG sensor. Fiber tunable FP file was used as a demodulation method. 32-bit embedded processor ARM9-S3C2440 chip was used as the main controller and simulated algorithm was realized on ARM to Simulation results show that the simulated annealing algorithm is reliable to process analog signals on ARM chip and significant performance is achieved as saving bandwidth, increasing the amounts of reusable fiber grating sensors in sensor system and speeding up data processing.