Here, we propose an optical fiber liquid level sensor (OFLLS) based on a Mach−Zehnder interferometer (MZI) formed with cascaded long-period fiber gratings (LPFGs) written on a polarization-maintaining fiber (PMF). The proposed sensor consists of a broadband light source, a polarization controller, 83.4-mm-long cascaded LPFGs as a sensor head, and an optical spectrum analyzer. Each LPFG was fabricated using a CO2 laser with a grating period of 490 μm and a grating length of 14.2 mm. The grating-free fiber segment (GFFS) between two LPFGs, which serves as an active area of the sensor head, was 55.0 mm long. If the external refractive index of the active area is varied by increasing the amount of water contained in a measuring cylinder within which the sensor head is located along its longitudinal direction, the refractive index difference between air and water causes an additional phase shift in the recoupled cladding mode. This additional phase shift is responsible for a wavelength shift in the in-fiber interference created by the cascaded LPFGs. Owing to PMF birefringence, the phase matching condition for the LPFG and thus the in-fiber interference are all polarization-dependent. Our cascaded LPFGs fabricated on the PMF show different interference spectra for two orthogonal input polarization states, e.g., linear horizontal polarization (LHP) and linear vertical polarization (LVP). For LHP and LVP input signals, the water level sensitivity was measured as approximately −37.7 and −137.0 pm/mm in a measurement range from 0 to 55 mm, respectively. Moreover, the cascaded LPFGs are also sensitive to ambient temperature changes, and temperature sensitivities at LHP and LVP input signals were measured as ~26.8 and ~209.0 pm/°C in a temperature range from 30 to 70 °C, respectively. Linear and independent responses to water level and ambient temperature changes enable our sensor to simultaneously measure water level and ambient temperature variations.