We investigate the optically amplified time-division-multiplexed (TDM) polarization-insensitive fiber-optic Michelson interferometric sensor (PIFOMIS) system using erbium-doped fiber amplifier (EDFA). The EDFA was named preamplifier, in-line amplifier or postamplifier; by the position it was located. We find that the preamplifier EDFA has limited usefulness because of its unstable amplification of the optical pulse trains. Both post- and in-line cases can work successfully in the TDM-PIFOMIS system. The amplitudes of the optical pulse trains are stable after amplified by the in-line EDFA, this is a significantly advantage of the optically amplified TDM-PIFOMIS system. The MPDS of the unamplified TDM-PIPOMIS system with an extinction ratio (ER) of 33 dB of the output pulse of the optical guide wave (OGW) modulator was 2.4/spl times/10/sup -5/ rad/(Hz)/sup 1/2/ at 1 kHz. For maintaining MPDS better than 3.4/spl times/10/sup -5/ rad/(Hz)/sup 1/2/ at 1 kHz, the allowable worst ER for the post- and in-line amplified system are 20 and 17.8 dB, respectively, and the corresponding input signal peak power should be larger than -20 and -25 dBm. While employing such two post- and two in-line EDFAs in the TDM-PIFOMIS system, the allowable loss of the sensor array is 47 dB. We analyze the phase-induced intensity noise (PIIN) of the optically amplified TDM-PIFOMIS system in detail and propose methods to reduce the PIIN. The output optical pulse of an intensity modulator with high ER is a key issue to minimize the PIIN and sensor crosstalk in the system. In order to reduce the system PIIN, complexity and cost, we suggest an optimum optically amplified WDM (wavelength-division multiplexing)-TDM hybrid PIFOMIS system with four wavelengths and four eight-sensor subarrays.