Fiber-optics (FO) have great potential for distributed sensing in various harsh environment applications. Their advantages include high resolution and multiplexing capabilities, inherent immunity to electromagnetic interference, and low weight/volume. However, their widespread adoption in commercial applications has been considerably limited by the high cost, size, weight, and lack of capabilities of the readout unit used to interpret the FO signals. PARC has developed a breakthrough wavelength shift detection (WSD) technology that is capable of reading out signals from wavelength-encoded FO and other optical sensors with high sensitivity using a compact, high-speed and low-cost unit. In this paper, its calibration and noise performance is demonstrated for high-resolution (up to 1,45 fm/√Hz) acoustic emission (AE) detection of fast (up to 1 MHz) dynamic strain signals.