Failure detection in a cross-ply laminated composite beam under tensile loading were performed using a fiber Bragg grating (FBG) sensor. A Passive Mach-Zehnder interferometric demodulator was proposed to enhance sensitivity and bandwidth. The proposed FBG sensor system without active device such as a phase modulator is very simple in configuration, easy to implement and enables the measurement of high-frequency vibration with low strain amplitude such as impact or failure signal. Failure signals detected by a FBG sensor had offset value corresponding to the strain shift with vibration at a maximum frequency of several hundreds of kilohertz. at the instant of transverse crack propagation in the 90 degree layer of composite beam.