The wavelength-encoded optical fiber position sensor has the advantages of being insensitive to light intensity changes and high stability. In order to further simplify the structure and reduce the cost, a new type of wavelength-encoded optical fiber position sensor is proposed. Using 10-order binary pseudo-random m-sequence as the coding standard of the sensor, the coding scale is made with a grating pitch of 100 μm and the sensing system is built, and the absolute position information is demodulated by the output voltage of the working channel. At the same time, the arrayed waveguide grating(AWG) is used as the demultiplexer and multiple photodiodes form a multi-wavelength detection system, which simplifies the sensing system and improves the response speed. Using a stepping motor with a unidirectional positioning accuracy of 6 μm as the displacement standard, the feasibility of designing a sensor with a resolution of 100 μm is verified.