A fiber in-line Mach-Zehnder interferometer based on dual inner air-cavities for simultaneous refractive index and temperature sensing is presented. The dual inner air-cavities are fabricated by use of femtosecond laser micromachining, fusion splicing, and slightly tapering techniques. The transmission spectrum of the interferometer exhibits a number of resonance wavelength dips corresponding to different orders of cladding modes. By tracking the shift of two dip wavelengths, the changes of refractive index and temperature can be obtained by use of a matrix method. The sensitivities achieved for refractive index and temperature are 464.96 nm/RIU and 28.7 pm/°C, respectively. The device has high potential in physical, chemical, and biological measurement due to its high sensitivity, multiparameter sensing capability, and ease of fabrication.