A new optical fiber Fabry-Perot (F-P) cavity sensor for liquid level detection was developed. The end of a flexible metal bellows, which can sustain a large strain displacement, is suggested to be one surface of the F-P cavity. Both electronic hardware and demodulation scheme in software were developed for fringes counting and direction discrimination of the liquid level. A scheme for temperature compensation was proposed. A prototype of the liquid level sensor was fabricated and the experiments for air pressure and water level measurement were carried out. Because the interference fringe counting technique was used for signal demodulation, the noise resistance capability of the sensor against optical power fluctuation and other disturbances is greatly improved.