A fiber optic acoustic emission sensor based on fused-tapered coupler and its applications in structural health monitoring are proposed in this paper. The sensor was embedded into the Carbon Fiber Reinforced Polymer (CFRP) laminates and tested using pencil lead break tests compared with the commercial acoustic emission sensor (R15 PZT). It successfully detected the AE signals. FOAES was applied in the Structural Health Monitoring (SHM) of CFRP materials. Failures of carbon fiber/epoxy composite laminates during three-point- bending test were monitored embedded FOAES. Results identified that the sensor embedded into composite structures successfully monitored failures of composite laminates online.