Frost condensing on the code plate of an optical transducer may cause degraded performance by diffusing reflected light. A test was performed to evaluate effects of temperature and humidity on a prototype time domain multiplexed optical position sensor. Temperature was varied from -55 to 125 degree(s)C and humidity from 0 to 100%. In addition, the test attempted to generate frost inside the transducer to interfere with operation of its code plate and read head. Overall, there were no significant losses due to humidity. There was no direct evidence that frost was present on the code plate at any time, though given the mechanical resistance of the transducer shaft at low temperature points, it appears likely that there was some frost buildup. Temperature effects were more pronounced as a loss of 2 dB or more was observed at low temperatures. There was no evidence of frost-induced losses.