Optical nanosensors based on plasmonic nanoparticles have great potential for chemical and biological sensing applications, but their spectral detection resolution is severely constrained by their broad resonance linewidth, and their spatial sensing depth is limited to several tens of nanometres. Here we demonstrate that coupling a strong dipolar plasmonic resonance of a single metallic nanoparticle to the narrow bandwidth resonances of an optical microcavity creates a hybrid mode and discretizes the broad localized resonance, boosting the sensing figure-of-merit by up to 36 times. This cavity–nanoparticle system effectively combines the advantages of Fabry–Perot microresonators with those of plasmonic nanoparticles, providing interesting features such as remote-sensing ability, incident-angle independent resonances, strong polarization dependence, lateral ultra small sensing volume and strongly improved detection resolution. Such a hybrid system can be used not only to locally monitor specific dynamic processes in biosensing, but also to remotely sense important film parameters in thin-film nanometrology.