Animals exploit soft structures to move smoothly and effectively in complex natural environments. These capabilities have inspired robotic engineers to incorporate soft actuating technologies into their designs. Developing soft muscle-like actuation technology is one of the grand challenges in the creation of soft-body robots that can move, deform their body, and modulate body stiffness. This paper presents the development of smart pneumatic McKibben muscles woven and reinforced by using conductive insulated wires to equip the muscles with an inherent sensing capability, in which the deformation of the muscles can be effectively measured by calculating the change of wire inductance. Sensing performance of a variety of weaving angles is investigated. The ideal McKibben muscle models are used for analysing muscle performance and sensing accuracy. The experimental results show that the contraction of the muscles is proportional to the measured change of inductance. This relationship is applied to a PID control system to control the contraction of smart muscles in simulation, and good control performance is achieved. The creation of smart muscles with an inherent sensing capability and a good controllability is promising for operation of future soft robots.