The development, fabrication, and embedment of fiber-optic evanescent wave sensors (FOEWSs) to monitor the state of charge (SOC) and the state of health (SOH) of lithium-ion batteries (LIBs) are presented. Etching of FOEWSs is performed using a solution of 40 wt % ammonium fluoride (NH4F) and 49 wt % hydrofluoric acid (HF) (6:1), which is found to be superior to an etching solution containing just 49 wt % HF. FOEWSs were characterized using glycerol and found to have the highest sensitivity in a lithium-ion battery when they lose 92% of their transmittance in the presence of glycerol on their sensing region. The physical effect that the FOEWS has on the graphite anode is also investigated and is found to be much more significant in Swagelok cells compared to that in in-house-fabricated pouch cells, mainly due to pressure variation. The FOEWS was found to be most sensitive to the changes in the LIB when it was completely embedded using a slurry of graphite anode material within a pouch cell. The optimized fabrication process of the embedded FOEWS demonstrates the potential of using such sensors commercially for real-time monitoring of the SOC and SOH of LIBs while in operation.