An elegant way of achieving an ultracompact optical fiber in-line Mach-Zehnder interferometer is to create an inner air cavity in a section of microfiber. The sandwich structure splits the light propagating in the fiber into two beams: one passes through the inner air cavity and the other travels along the silica wall of the cavity before recombining at the cavity end, resulting in an interference fringe pattern. Such a device is applied for strain measurement with a high sensitivity of 6.8 pm/με.