With zero excess lithium, anode-free lithium metal batteries (AFLMBs) can deliver much higher energy density than that of traditional lithium metal batteries. However, AFLMBs are prone to suffer from rapid capacity loss and short life. Monitoring and analyzing the capacity decay of AFLMBs are of great importance for their future applications. It is known that the capacity fade mainly comes from the formation of solid electrolyte interphase species and dead lithium, which leads to irreversible volume expansion. Therefore, monitoring and distinguishing the irreversible volume expansion or reversible volume expansion are the key points to analyze the capacity fade of AFLMBs. Herein, an applicable technique based on optical fiber sensors to characterize and quantize the volume change of AFLMBs is developed. By attaching fiber Bragg grating (FBG) sensors onto the surface of the multilayered anode-free pouch cells, the strain evolution of the cells is successfully monitored and correlated with their electrochemical properties. It is found that the decline of surface strain fluctuation amplitude caused by the loss of active lithium is the leading indicator of battery failure. The proposed sensing technique has excellent multiplexing capability that can be considered as an elementary unit for capacity fade analysis in next-generation battery management system.