A cost-effectively designed polychromator using holographic grating as spectral dispersive element and CCD line array as detector is applied to the multiplexing of a many-element fiber grating sensor network for measuring temperature and stationary strain. The influence of intensity and polarization fluctuations in the superluminescent diode as a broadband light source, and in the fiber transmission lines as well have been minimized by reducing parasitic reflections and introducing depolarizing elements. Other error sources of the sensor read-out stability have been reduced by appropriate peak fitting procedures of the CCD pixel intensity distribution and by the consumption of mechanically stable sensor heads for temperature and strain sensing with low cross sensitivity. A special mounting technique allowing compensation of thermally induced Bragg wavelength shifts is used for obtaining a wavelength reference in the polychromator. Thus, stability of wavelength readout is only noise-limited with a rms value of about 0.2 pm and yields a resolution and stability for measurement of temperature <EQ 0.1 K and for stationary strain <EQ 0.l5 (mu) (epsilon) .