Current commercial battery management systems (BMSs) do not provide adequate information in real time to mitigate issues of battery cells such as thermal runway. This paper explores and evaluates the integration of fiber optic Bragg grating (FBG) sensors inside lithium-ion battery (LiB) coin cells. Strain and internal and external temperatures were recorded using FBG sensors, and the battery cells were evaluated at a cycling C/20 rate. The preliminary results present scanning electron microscope (SEM) images of electrode degradation upon sensor integration and the systematic process of sensor integration to eliminate degradation in electrodes during cell charge/discharge cycles. Recommendation for successful FBG sensor integration is given, and the strain and temperature data is presented. The FBG sensor was placed on the inside of the coin cell between the electrodes and the separator layers towards the most electrochemically active area. On the outside, the temperature of the coin cell casing as well as the ambient temperature was recorded. Results show stable strain behavior within the cell and about 10 °C difference between the inside of the coin cell and the ambient environment over time during charging/discharging cycles. This study is intended to contribute to the safe integration of FBG sensors inside hermetically sealed batteries and to detection of real-time temperature and strain gradient inside a cell, ultimately improving reliability of current BMSs.