A new fabrication method for a locally micro-structured fiber Bragg grating (LMFBG) is proposed and demonstrated. With this new type of LMFBG, simultaneous sensing of compressive force and temperature is possible. The LMFBG consists of a circumferential groove of ∼86 μm length and ∼27 μm depth in the middle of a type I FBG. Direct femtosecond ( fs ) laser ablation was applied to manufacture the groove with constant depth and steep side walls. Axial compressive force acting on the LMFBG results in the occurrence of a pass band in the reflection spectrum due to a stress-induced phase shift in the structured part of the LMFBG. Temperature changes instead induce shifts of the whole spectrum without influencing its shape. A theoretical model that can describe the LMFBG reflection spectra is presented. It consists of a product of three transfer matrices for uniform FBGs with external force, temperature, and the optical power used to interrogate the LMFBG as free parameters. The model-based theoretical line shapes showed very good agreements with measured LMFBG spectra at various force and temperature values in the ranges of 5–45 °C and 0 to –1.44 N. The ability to describe the LMFGB as a combination of three uniform FBGs is due to the precise shape of the engraved structure which is a unique feature of fs laser machined LMFBGs. The difference between the LMFBG-based force and temperature values and the reference values are <0.03 N for force and <2.0 K for temperature.