Dissolved hydrogen is a symbol gas decomposed by power transformer oil for electrical faults such as overheat or partial discharges. A novel D-shaped fiber Bragg grating (D-FBG) sensor is herein proposed and was fabricated with magnetron sputtering to measure the dissolved hydrogen concentration in power transformer oil in this paper. Different from the RI (refractive index)-based effect, D-FBG in this case is sensitive to curvature caused by stress from sensing coating, leading to Bragg wavelength shifts accordingly. The relationship between the D-FBG wavelength shift and dissolved hydrogen concentration in oil was measured experimentally in the laboratory. The detected sensitivity could be as high as 1.96 μL/L at every 1-pm wavelength shift. The results proved that a simple, polished FBG-based hydrogen sensor provides a linear measuring characteristic in the range of low hydrogen concentrations in transformer oil. Moreover, the stable hydrogen sensing performance was investigated by X-ray diffraction analysis.