This paper presents a new method to transmit signals of transducers placed on a rotating machine element such as a gear shaft with infrared light. Light emitting diodes (LEDs) are placed at the circumference of the shaft instead of the end of it. And externally placed photo diodes (PDs) receive the frequency modulated light emitted by LEDs. Optimum numbers of LEDs and PDs are investigated for perfect signal transmission. Then the proposed way has been confirmed by a prototype of optical signal transmission system. It enables the signal acquisition from arbitrary point of a rotating element since it makes free from the difficulty of wire feeding. In addition, multichannel signal transmission is also realized by multiplexing method.