The development of a highly sensitive all-fiber temperature sensor based on a Sagnac interferometer configuration is demonstrated here. We use 10 m of an erbium-doped fiber (EDF) as a passive sensing element inside the Sagnac loop, taking advantage of the extra birefringence added by the presence of the doping elements. Using a standard interrogation method of simply tracing a interference peak, we were able to detect temperature variations with a sensitivity of up to 0.2 nm/°C and high linearity. The results demonstrate, for the first time, that the usage of an EDF as a totally passive element can be an interesting option to extend the range of parameter possibilities achievable for highly sensitive temperature sensors.