The paper reviews the architecture and design of low-cost high-performance sensor systems. These systems consist of a number of multiplexed sensor elements, sensor-specific front-ends, modifiers and microcontroller or digital signal processors (DSPs). Important properties that act as focus points for the system design are: adaptability, accuracy, dynamic range, speed, power consumption, reliability and costs. To enable low-cost design and implementation, a universal set-up, using universal components, is used. Universal sensor interfaces with front-ends for resistive, capacitive, resistive-bridge sensing elements, as well as voltage-, current- and charge-generating sensing elements are discussed. The analog sensor signals are converted to analog signals in the time domain using period-modulated oscillators. The A/D conversion of the time-domain signal can be implemented in the microcontroller or DSP. It is shown that, also in this case, the principles of the sigma-delta converters can be applied. The paper shows that in a systematic overall design approach it is even possible to reduce many of the physical nonidealities of the sensor elements. As an example, the paper deals with the design problems of reliable, high-performance low-cost capacitive sensors. The problems and their solutions of both the physical- and the electrical-signal processing are discussed. The examples consider the application of capacitive sensors in position detectors, liquid-level detectors and personnel detectors.