A novel signal processing approach, which results in a significant improvement in the measurement resolution for a ruby-based fiber optic temperature sensor, is proposed. The technique discussed is based on the phase-sensitive detection (lock-in) of the fluorescent signal. As with the other phase-sensitive detection techniques, it has the significant advantage of a high noise-suppression ability, but it differs from existing phase sensitive detection methods in several aspects to yield this improvement. When the system is used to monitor the fluorescence lifetime of ruby, in the range from 40 degree(s)C to 100 degree(s)C, the measurement resolution achievable due to the signal processing scheme is +/- 0.04 degree(s)C, and from 100 degree(s)C to 200 degree(s)C it is +/- 0.2 degree(s)C. At 450 degree(s)C, the resolution is +/- 1 degree(s)C. However, other measurement errors must be reduced to achieve a high accuracy of measurement comparable with this. Finally, the proposed technique can be used not only for the monitoring of fluorescence lifetime, but also for the highly accurate monitoring of the time-constants of other appropriate first-order systems, such as a capacitive sensor, operating under high-noise condition.