In the present study, sustainable carbon fibers (CF) have been prepared from cellulose filaments and subsequently used as strain-sensing elements in composites. Using three continuous thermal processing steps (stabilization at 230 °C, low-temperature carbonization at 900 °C, and high-temperature carbonization at 1500 °C) followed by a discontinuous ultra-high temperature treatment at 2250 °C, CF offering a large variety of profiles regarding mechanical and electrical properties were prepared. A notable dependency trend was observed concerning the influence of treatment temperature, with the tensile modulus exhibiting a consistent increase with rising treatment temperature, reaching a maximum of 96 GPa. In contrast, the elongation at break showed an opposite trend. Additionally, improved order of the carbon structure, accompanied by decreasing electrical resistance, was also observed at higher thermal treatment temperatures. Three CF samples taken after low, high, and ultra-high temperature treatment were used as strain sensor elements in glass fiber reinforced polymer composites. All cellulose-based CF were viable for fracture-based strain sensing, but the CF sample taken after the high-temperature carbonization exhibited the most favorable sensor performance. A high gauge factor of 101, combined with low baseline resistance and consistent behavior across repeated loading cycles and relaxation times, was observed for this sample. Higher resistance and a lower gauge factor were observed for the specimens based on the ultra-high-temperature-treated CF despite better conductivity at the fiber level, highlighting that a combination of electrical and mechanical properties influences the strain sensing behavior.