In this paper, temperature compensated microfiber Bragg grating (mFBG) is realized by use of a liquid with a negative thermo-optic coefficient. The effects of grating elongation and the index change of silica glass are compensated by refractive index change of the liquid through evanescent-field interaction. A reduced thermal sensitivity of 0.67 pm/°C is achieved, which is 1/15 in magnitude of the uncompensated counterparts. Further theoretical analysis demonstrates that temperature insensitivity can be obtained with different combinations of microfiber diameter and the refractive index/thermal optic coefficient of the employed liquid. The proposed method is promising due to the compactness and high flexibility of the device.