A novel optical fiber sensor based on a balloon-shaped bent single-mode (BSBS) fiber structure incorporating a long-period grating (LPG) for simultaneous measurement of displacement and temperature is described and experimentally demonstrated. The sensor is fabricated by splicing a BSBS fiber structure based on a Mach-Zehnder interferometer (MZI) with a long-period grating (LPG). The interference dip formed by the BSBS fiber structure is sensitive to external displacement and temperature variation, while that formed by an LPG only depends on temperature, displacement, and temperature and, therefore, can he unambiguously and simultaneously measured by this sensor. Experimental results show that this sensor offers a high displacement sensitivity of -306 pm/mu m over the displacement range of 0-80 mu m and a temperature sensitivity of 42.9 pm/degrees C over the temperature range of 20-45 degrees C. Due to its high measurement sensitivities, low cost, and good repeatability, this sensor could be a realistic candidate for applications where displacement and temperature need to be measured simultaneously.