A two-component bacteriophage-based bioluminescent reporter system was developed for the detection of Escherichia coli in environmental samples. The bioreporter system consists of a luxI integrated lambda bacteriophage and a lux-based bioluminescent reporter cell that responds to the infection event through acyl-homoserine lactone (AHL) mediated quorum sensing and bioluminescent signal stimulation. This work addresses the ability of the bioreporter system to detect and quantify the target pathogen in response to two analytical challenges: (1) detection of target cells in the presence of lactonase-producing non-target organisms that could interrupt AHL signal transduction, and (2) detection of sub-lethally injured or physiologically stressed target cells. The bioreporter system was able to autonomously respond to lambda phage infection events with a target host E. coli at 1x10(8) cfu/mL against a background of lactonase-producing Arthrobacter globiformis at cell densities ranging from 1 to 1x10(8) cfu/mL. E. coli target cells stressed by carbon-limitation for 2 weeks (i.e., starvation) or exposure to iodine for 1 week at 2 and 20 ppm (i.e., disinfection) yield a reduced, but detectable, biosensor response. Conversely, short-term iodine exposure produces a significant increase in bioreporter response within the first 24 h. The signal response and limit of detection for the two-component bioreporter system were affected by the physiology and environment of the target, but the bioreporter maintained target specificity demonstrating its potential application for remote sensing of pathogens.