Abstract: Subgrade settlement monitoring is one of the most fundamental work for safe construction and operation of highway engineering. The traditional roadbed monitoring methods are mostly point-based, simple and easy to operate, but have technical problems such as serious missed inspection. Recently, the high-spatial-resolution and accurate-microstrain-recognition distributed optical fiber technology has been widely used in various fields. It can provide more efficient subgrade monitoring method than the traditional methods. Therefore, this paper introduces an advanced distributed optical fiber sensing technology and its novel saw-tooth layout method for the subgrade settlement research and calculation analysis. Concurrently, a comparison research with the traditional detection methods is implemented. The results show that the saw-tooth optical fiber can generate more monitoring data and reflect the actual subgrade settlement with more detailed information. The three-dimensional cubic spline interpolation method based on MATLAB further confirms that the saw-tooth optical fiber can intuitively express the subgrade settlement in testing area. The distributed optical fiber sensing technology has simple operation, wide monitoring range and high accuracy, which makes it have better performance in settlement detection. This method and its novel layout can provide important technical support for practical engineering applications.