A prototype nanoparticle biosensor based on localized surface plasmon resonance (LSPR) spectroscopy was developed to detect drug binding to human membrane-bound cytochrome P450 3A4 (CYP3A4). CYP3A4 is one of the most important enzymes in drug and xenobiotic metabolism in the human body. Because of the inherent propensity of CYP3A4 to aggregate, it is difficult to study drug binding to this protein in solution and on surfaces. In this paper, we use a soluble nanometer scale membrane bilayer disk (Nanodisk) to functionally stabilize monomeric CYP3A4 on Ag nanoparticle surfaces fabricated by nanosphere lithography. CYP3A4-Nanodiscs have absorption bands in the visible wavelength region, which upon binding certain drugs shift to either shorter (type I) or longer wavelengths (type II). On the basis of the coupling between the LSPR of the Ag nanoparticles and the electronic resonances of the heme chromophore in CYP3A4-Nanodiscs, LSPR spectroscopy is used to detect drug binding with high sensitivity. This paper combines LSPR and Nanodisc techniques to optically sense drug binding to a functionally stable membrane protein, with the goal of integrating this with microfluidics and expanding it into a multiarray format, enabling high-throughput screening.