The significance of strain measurement is obvious for the analysis of Fiber-Reinforced Polymer (FRP) composites. Conventional strain measurement methods are sufficient for static testing in general. Nevertheless, if the requirements exceed the capabilities of these conventional methods, more sophisticated techniques are necessary to obtain strain data. Fiber Bragg Grating (FBG) sensors have many advantages for strain measurement over conventional ones. Thus, the present paper suggests a novel method for biaxial strain measurement using embedded FBG sensors during the fatigue testing of FRP composites. Poisson's ratio and its reduction were monitored for each cyclic loading by using embedded FBG sensors for a given specimen and correlated with the fatigue stages determined based on the variations of the applied fatigue loading and temperature due to the autogenous heating to predict an oncoming failure of the continuous fiber-reinforced epoxy matrix composite specimens under fatigue loading. The results show that FBG sensor technology has a remarkable potential for monitoring the evolution of Poisson's ratio on a cycle-by-cycle basis, which can reliably be used towards tracking the fatigue stages of composite for structural health monitoring purposes.