This Letter describes the design, production, and characterization of a 1×2 arrayed waveguide grating (AWG) for fiber Bragg grating (FBG) readout, centered at 850 nm, with a channel spacing of 1 nm. The employed manufacturing process is laser direct lithography, a low-cost, rapid-prototyping capable, maskless method that allows for short iteration cycles and simple migration of a successful design to mask-based high throughput methods. We also consider the achievable AWG performance if used for strain or temperature measurements with FBG sensors.