Recent satellites, growing in size and electrical power capacity, require sophisticated technology in terms of thermal and structural design. On the other hand, reducing their lifecycle cost while maintaining their reliability remains a definite necessity. From this point of view, a health monitoring system, designed to monitor the thermal and structural condition of a satellite during all its life stages, is expected to be a very useful tool. The authors are developing a health monitoring system for satellites utilizing a FBG (fiber Bragg grating) sensor. This paper first reports on a newly developed optical fiber connector that is used to install FBG sensors in satellite structures. Then, the assessment of a FBG sensor system in a space environment simulated in a thermal vacuum chamber is described. Finally, the results of an experimental study are presented in which damage due to thermal stress, that is typical in satellite structure, is detected by investigating the reflection spectrum from the embedded FBG sensor.