Advanced ceramics have been increasingly used for various manufacturing processes. The current sensors used in ceramic tools are difficult to reliably provide thermomechanical measurements in or near the ceramic tool–workpiece interface. Thin film micro sensors could be embedded—thus avoiding direct contact with workpieces—at critical locations without interfering with normal manufacturing operation of the ceramic tool. However, little research has been conducted in embedding of thin film sensors in ceramic materials. To initiate the study on ceramic embedded thin film sensors, palladium-13 wt% chromium (PdCr) material was used to fabricate thin film strain gauges (TFSGs) on sapphire substrates and a diffusion bonding process was used to embed the TFSGs into sapphire. The interface between the sapphire and embedded sensors was characterized by high-resolution TEM (HRTEM). The results clearly indicated a good chemical bonding between the host sapphire and embedded thin films with no inter-diffusion. Moreover, TEM images showed there were local stresses at the interface due to the chemical bonding. The functionality of the embedded micro TFSGs into sapphire was successfully characterized. This study clearly demonstrates the feasibility of fabricating and embedding micro thin film sensors for potential use in ceramic tools for various applications.