A pulse oximetry sensor having a temperature indicator and a method of operating such a sensor to visually indicate to an operator the temperature of the sensor and hence a measure of the temperature of the tissue location to which the sensor is attached. In one embodiment, the temperature indicator is a color changing liquid crystal temperature monitor. The liquid crystal temperature monitor includes a number of segments, each of which is activateable within a predetermined temperature range to be monitored. In other embodiments of the present invention, the oximetry sensor includes an active regulated heating element to enhance blood perfusion within the tissue location being monitored. In either embodiment, the temperature indicator provides the operator with an effective way of monitoring the temperature of the sensor and the adjacent tissue location. In case of a heated sensor, the temperature indicator informs the operator that the warming function of the sensor is functioning correctly. In case of a nonheated sensor, the temperature indicator informs the operator regarding a measure of the degree of perfusion.