Phase generated carrier (PGC) homodyne demodulation technique is frequently used in optical fiber interferometric sensors for demodulating sensing signals. However, it is difficult for the system to achieve optimum performance because the electronic components which constitute the analog circuit of a PGC homodyne demodulation system have some problems such as overload, improper resistance, etc. all those will bring noise to the system. Therefore, the system could not be allowed to work well for those noises introduced by electronic components. For overcoming these disadvantages of the analog circuit mentioned above, a digital PGC demodulation system based on LabVIEW is described in this paper, and it is applied to demodulate the sensing signals from all fiber oil pipeline leakage detection system based on Sagnac interferometer. The results verify that this system can well demodulate sensing signals.© (2006) COPYRIGHT SPIE--The International Society for Optical Engineering. Downloading of the abstract is permitted for personal use only.