We describe a MRI-compatible biopsy needle instrumented with optical fiber Bragg gratings for measuring bending deflections of the needle as it is inserted into tissues. During procedures, such as diagnostic biopsies and localized treatments, it is useful to track any tool deviation from the planned trajectory to minimize positioning errors and procedural complications. The goal is to display tool deflections in real time, with greater bandwidth and accuracy than when viewing the tool in MR images. A standard 18 ga × 15 cm inner needle is prepared using a fixture, and 350-m-deep grooves are created along its length. Optical fibers are embedded in the grooves. Two sets of sensors, located at different points along the needle, provide an estimate of the bent profile, as well as temperature compensation. Tests of the needle in a water bath showed that it produced no adverse imaging artifacts when used with the MR scanner.