In this study, the measurement accuracy of an embedded time-grating sensor was characterized for different mounting modes. Based on the sensing mechanism of the embedded time-grating sensor, the effects of variations in the mounting air gap, radial mounting, and axial mounting on the measurement accuracy of the sensor were analyzed, and the sensing measurement model was established for different mounting modes. Simulation and experimental verifications of the mounting modes of the sensor were performed. The simulation and experimental results showed that different mounting modes influenced the measurement accuracy of the sensor, with radial mounting having the most significant effect on the measurement error of the sensor, followed by air gap spacing and axial mounting. This study has significant theoretical and practical implications in guiding the installation, minimizing the installation errors, and improving the measurement accuracy of embedded time-grating sensors.