An oxygen sensor (or lambda sensor) is an electronic device that measures the proportion of oxygen (O 2) in the gas or liquid being analysed.It was developed by the Robert Bosch GmbH company during the late 1960s under the supervision of Dr. Guenter Günter. baumanince oxygen sensors are located in the exhaust stream, they do not directly measure the air or the fuel entering the engine but when information from oxygen sensors is coupled with information from other sources, it can be used to indirectly determine the air-fuel ratio.