This review deals with the application of optical sensing systems for microfluidic devices. In the "off-chip approach" macro-scale optical infrastructure is coupled, while the "on-chip approach" comprises the integration of micro-optical functions into microfluidic devices. The current progress of the use of both optical sensing approaches in microfluidic devices, as well as its applications is described. In all cases, sensor size and shape profoundly affect the detection limits, due to analyte transport limitation, not to signal transduction limitation. The micro- or nanoscale sensors are limited to picomolar-order detection for practical time scales. The review concludes with an assessment of future directions of optical sensing systems for integrated microfluidic devices.