An optical fiber sensor presented is capable of monitoring the presence of carbon monoxide (CO) in the exhaust environment. Conventional gas sensor used to detect CO concentration is often difficult to achieve high sensitivity, selectivity, and specificity in presence of a mixture of gases. The design of this sensor using DFB LD as light source and low-cost near-infrared components, which make it suitable for using in an exhaust environment, is discussed. The sensor based on spectrum absorption principle is immune to corrosion and poison as it consists of glass and ceramic parts. By using differential construction, it can eliminate the influence of common mode interfering signals caused by the wave of LDs light intension, thermal zero shift, and zero shift of photoelectric device. A national instrument cRIO-9215 data acquisition card was used to acquire the output voltages and a LabView virtual instrument was used to store and process data. The response of the sensor to carbon dioxide supplied from the standard gas with dry nitrogen as a balancing gas in the laboratory was performed. The experimental results indicated that the sensor has been developed to operate within an exhaust environment and have high sensitivity and stability so it does not suffer from other gases interferences. The lower limit of detection for the sensor was found to be not less than 50 ppm for CO. This can be meeting the requirement of 100 ppm which is to be poisonous to human.