We propose a new approach to predicting multiple damage states in composite laminates using embedded fiber Bragg grating (FBG) sensors. FBG sensors are sensitive to a non-uniform strain distribution along their longitudinal direction, and the effects appear in the power spectrum of the reflected light from the gage section. In this paper, we propose a numerical model to predict both the damage process of the laminate and the change of the reflection spectrum from the FBG sensor. The proposed approach is then applied to explain the results of a quasi-static tensile test for a notched CFRP cross-ply laminate with an embedded FBG sensor. The results demonstrate that the proposed approach is useful for predicting multiple damage states in composite laminates.