In order to optimize the performance of optical devices fabricated with side-polished fibers, online polishing and measurements were conducted to study sensing characteristics of side-polished fiber effected by polishing length and remaining cladding thickness. The results show that, the sensing characteristics for the side-polished fiber used here can be divided into three regions according to its sensitivity. In the first region with refractive index ranging from 1.300 to 1.450, low sensitivity and high linearity were achieved. In the second region with refractive index ranging from 1.450 to 1.500, high sensitivity can be obtained, while very low stability. Compared to the first two regions, both relatively good sensitivity, linearity and stability can be spontaneously achieved in the third region with refractive index higher than 1.50. Comparisons of fibers with polishing length of 10 mm and 20 mm show that the increase of polishing length do not result in improvement of sensitivity, while a loss in stability. The remaining cladding thickness plays an important role in determinating the sensitivity and the insert loss of side-polished fiber, therefore it should be optimized to achieve the desired sensors.