A method and apparatus for holographically processing optical signals in a fiber-optic sensor system. In the present invention, holographic processors are utilized in various combinations with light sources, fiber-optic transmission means, sensors and detectors to provide low cost, compact, sensitive and accurate sensor systems. By means of the holographic processors of the present invention, the aforementioned sensor systems are used to monitor such physical parameters as temperature, pressure, flow-rate, and the like, and to provide output signal indications thereof that are compatible with digital receiving stations and immune to electro-magnetic interference, hazardous atmosphere, and the inimical effects of inadvertent intensity variation due to equipment vibration and the like. In one typical embodiment, a pair of holographic processors are employed in a color multiplex-demultiplex sensor system in which a first holographic processor is employed to color multiplex a sensor signal and a second holographic processor is employed to decode the color-multiplexed signal into a binary pattern that is then transmitted onto a set of photodetectors. In each of the embodiments of the invention disclosed, a unique geometrical orientation of a hologram is utilized to minimize spurious signal interference that would otherwise hamper or totally preclude the holographic processing
