In this paper, a novel simple but effective method is presented to construct compact all-fiber Mach-Zehnder (M-Z) interferometer based on CO2-lasermachined micro-notches in single mode fibers. Interference fringes are obtained, and temperature, force, and bending characteristics of the interferometer have been experimentally investigated. Such a compact fiber component with acceptable sensing performances makes it a good candidate for the measurement of numerous physical parameters.