A single-mode-multimode-single-mode (SMS) optical fiber-based displacement sensing system mounted on an Ilizarov transverse tibial bone transport device for microcirculation reconstruction is reported. Wide-range displacement is approximated as a uniform extension of a spring that is connected to an SMS optical fiber structure acting as the displacement sensor and allowing full displacement characterization. Transmission spectrum changes are measured, providing a displacement range of 24 mm with a sensitivity of $ - {55.42}\;{\rm pm/mm}$-55.42pm/mm and a resolution of 45.2 µm. The experimental results are characterized using a polynomial response curve for measuring the displacement due to transverse distraction of the Ilizarov device. The SMS fiber interrogation system is based on a macrobending fiber edge filter-based ratiometric measurement system. The use of SMS fibers together with the macrobending fiber-based interrogation system eliminates the influence of temperature on the displacement measurement. The implementation of the all-fiber sensing system of this investigation has uniquely facilitated a smart clinical device with a wide displacement range as well as operating in real-time monitoring when attached to the Ilizarov transverse tibial bone transport device. It also means that this fiber-optic sensing device can be made more cost-effective, simpler in construction, and more versatile while providing a high degree of measurement accuracy and resolution.