To reduce the effects of surface characteristics of materials and background noise of a magnetic excitation field, a new sensor with magnetic shielding was developed for eddy-current (EC) testing. Based on the analysis of EC theory, the performances of different cores, including air core, solid cylindrical ferrite core, hollow cylindrical ferrite core, and magnetic shielding ferrite core, were analyzed. The simulation results show that the magnetic shielding core can increase the EC density in the test material. External magnetic field shielding can effectively improve the defects' detection sensitivity and the detection depth of subsurface defects. According to the simulation results of finite-element excitation, a bidirectional-excitation EC sensor with magnetic shielding was prepared and optimized according to the orthogonal experiment. Finally, the experimental results show that it can effectively detect the notch defects of a 10-mm-thick stainless steel plate surface at a distance of 7 mm. A linear relationship was observed between the change of impedance amplitude, phase difference, and depth of subsurface defects.