This study evaluates the potential for the use of low-cost discrete optical semiconductors, specifically light-emitting diodes (LEDs) and a photodiode, for non-invasive measurement of microvascular tissue oxygen saturation (StO2). StO2 is a crucial biomarker in monitoring microvascular function and tissue viability. Spectrometer-based methods typically use complex and expensive equipment, with the cost per patient potentially amounting to hundreds of dollars. This study aims to provide understanding of tissue-light interaction with broader implications extending to applications such as photoplethysmography (PPG). Our approach involves a system that includes three specifically selected LEDs coupled with a photodiode, focusing on assessing microvascular StO2. The methodology includes several phases: in vitro calibration using a controlled deoxygenation process in a liquid tissue phantom, computational simulations to estimate the penetration depths of selected LED wavelengths, an analysis of the effects of variability in LED output on measurement accuracy, and a preliminary human study. Results from the in vitro experiments demonstrated a root mean square error of 3.9 StO2-% between a spectrometer reference and our technique. The human study including baseline, occlusion and post-occlusion StO2 measurements in six volunteers resulted in 76.0, 52.6 and 77.5 StO2-%, respectively. Computational simulations confirmed the effective penetration of selected wavelengths into targeted microvascular layers. The intrinsic and external factors affecting the measurement accuracy were analyzed. The findings support the feasibility of a cost-effective, simplified, and effective system for continuous monitoring of microvascular tissue oxygenation.