A detailed investigation has been undertaken into the transmission mode of the matched fiber Bragg grating interrogation scheme with respect to its use in optical fiber sensor applications. Analytical and numerical models of the scheme have been developed. Experimental studies presented include the effect of the spectral characteristics of the gratings on system performance, results of strain and compression calibrations, a scheme to correct for intensity fluctuations, and the correction of temperature-induced shifts by collocating sensor and reference gratings. The results are in good agreement with a simplified model of the transmission mode. The analysis provides quantitative relationships between key sensor design parameters, such as sensitivity and measurement range as a function of grating bandwidth.