A biosensor is an integrated receptor-transducer device, which can convert a biological response into an electrical signal. The design and development of biosensors have taken a center stage for researchers or scientists in the recent decade owing to the wide range of biosensor applications, such as health care and disease diagnosis, environmental monitoring, water and food quality monitoring, and drug delivery. The main challenges involved in the biosensor progress are (i) the efficient capturing of biorecognition signals and the transformation of these signals into electrochemical, electrical, optical, gravimetric, or acoustic signals (transduction process), (ii) enhancing transducer performance i.e., increasing sensitivity, shorter response time, reproducibility, and low detection limits even to detect individual molecules, and (iii) miniaturization of the biosensing devices using micro-and nano-fabrication technologies. Those challenges can be met through the integration of sensing technology with nanomaterials, which range from zero- to three-dimensional, possessing a high surface-to-volume ratio, good conductivities, shock-bearing abilities, and color tunability. Nanomaterials (NMs) employed in the fabrication and nanobiosensors include nanoparticles (NPs) (high stability and high carrier capacity), nanowires (NWs) and nanorods (NRs) (capable of high detection sensitivity), carbon nanotubes (CNTs) (large surface area, high electrical and thermal conductivity), and quantum dots (QDs) (color tunability). Furthermore, these nanomaterials can themselves act as transduction elements. This review summarizes the evolution of biosensors, the types of biosensors based on their receptors, transducers, and modern approaches employed in biosensors using nanomaterials such as NPs (e.g., noble metal NPs and metal oxide NPs), NWs, NRs, CNTs, QDs, and dendrimers and their recent advancement in biosensing technology with the expansion of nanotechnology.