A reliable and low-cost two-wavelength quadrature interrogating method has been developed to demodulate optical signals from diaphragm-based Fabry-Perot interferometric fiber optic sensors for multipoint partial discharge detection in power transformers. Commercial available fused-silica parts (a wafer, a fiber ferrule, and a mating sleeve) and a cleaved optical single mode fiber were bonded together to form an extrinsic Fabry-Perot acoustic sensor. Two lasers with center wavelengths separated by a quarter of the period of sensor interference fringes were used to probe acousticwave- induced diaphragm vibration. A coarse wavelength-division multiplexing (CWDM) add/drop multiplexer was used to separate the reflected two wavelengths before two photo detectors. Optical couplers were used to distribute mixed laser light to each sensor-detector module for multiplexing purpose. Sensor structure, detection system design and experiment results are presented.