The Type LM35 temperature sensor from National Semiconductor is very popular for two reasons: it produces an output voltage that is directly proportional to the measured temperature in degrees Celsius, and it enables temperatures below zero to be measured. A drawback of the device is, however, that in its standard application circuit it needs to be connected to the actual measuring circuit via a three-wire link. This drawback is neatly negated by the present circuit. When the LM35 is connected as shown, a two-wire link for the measurement range of –5 °C to +40 °C becomes possible.Actually, the circuit shown is a temperature-dependent current source, since it uses the variation of the quiescent current with changes in temperature. The values of resistors R3 and R4 are calculated to give an output voltage of 10mV °C–1. Where good accuracy is desirable or necessary, 1% resistors should be used. In this context, note that a loss resistance in the link between sensor and measuring circuit may cause a measurement error of about 1 °C for every 5 ohms of resistance. Capacitor C1 eliminates undesired interference and noise signals. At an ambient temperature of 25 °C, the circuit draws a current of about 2mA.
http://www.extremecircuits.net/2010/08/two-wire-temperature-sensor.html
