Carbon nanotubes (CNTs) have extensively been used for electrochemical and optical biosensing due to the unique mechanical, chemical, and electrical properties. This review introduces two functionalization categories, noncovalent interaction along the CNTs sidewalls via physical adsorption or entrapment and covalent binding via carboxylate chemistry or nonselective attack of nanotube sidewalls by highly reactive species and gives an overview on the functionalized CNTs-based biosensing methodologies for DNA, antigen-antibody, cells, and other biological molecules. Furthermore, the in vivo near-IR fluorescence biosensing application of CNTs with high photostability and efficiency is discussed. Finally, field-effect transistors based on semiconductor CNTs are also summarized for ultrasensitive detection. Biosensors based on CNTs provide a significant avenue for the detection of biomolecules in vivo and in vitro applications.