In order to increase the multiplexing density of the fiber Bragg gratings (FBGs) for a low cost per-sensor, based on the analysis of the spectrum shadow distortion (SSD), a novel successive demultiplexing scheme for FBG sensors has been developed. It is based on the optical code division multiple access (CDMA) balanced demodulation. A high-density multiplexing-demultiplexing system for FBG sensors has been designed, and corresponding simulation carried out has demonstrated that the FBG sensors’ reflective signals can still be obtained accurately and respectively, even if FBG sensors’ operating bandwidths heavily overlap. The SSD has been greatly mitigated.