We have proposed a multiplexed fiber-optic sensor system using an optical loop with a frequency shifter. The measured output power spectrum of the system has shown that the multiprexed signals superimpose upon a noise pedestal which is like a series of hill peaks. In this paper, the output power spectrum is theoretically analyzed from the output intensity autocor-relation function. It displays that the noise pedestal originates from the laser phase-induced intensity noise. The noise level depends on the coherence time of the laser source. The positions of peaks are decided by the working frequency of the frequency shifter in the optical loop. The sensitivity of the system are related to the bandwidth B, the coherence time Tc, the sensor number n to be multiplexed, the loop loss α, and the fiber coupler parameters. Properly choosing these parameters is beneficial to improve the sensitivity of system.