Monitoring subsurface soil movement is important in many geotechnical engineering applications such as stability of slopes, road embankments and settlement in foundations. Soil displacement measurement is also helpful in understanding the formation of shrinkage cracks. Clay soils undergo shrinkage during drying and experience substantial stresses and strains, which results in shrinkage cracks. This paper presents a novel approach to measure soil strain using Fibre Bragg grating (FBG) sensors. In the experiments described, FBG sensors have been used to investigate the strain development in clay during drying. FBG sensors are fabricated in the core region of specially fabricated single mode low-loss germanium doped silicate optical fibres. The grating is the laser-inscribed region with a periodically varying refractive index, which reflects a specific light wavelength. Due to the applied strain, ε, there is a change in the wavelength which can be measured and is directly proposal to strain. Kaolin clay, mixed with water close to the liquid limit, was allowed to dry under room temperature. The specimens were prepared in thin, long linear shrinkage moulds. FBG sensors were placed inside soil at the centre of the specimen. The strain development during drying underwent four phases moving from compression to tension. An oscillating nature of strain was also observed throughout the drying process. Results obtained are useful to develop analytical solutions to describe stress-strain behavior of drying soil.