Water-soluble, regioregular polythiophene (PT) derivatives are conformational sensitive to external stimuli, and their spectral responses are determined by conformation changes, π-π interactions and scattering of visible lights originated from PT aggregates. In this paper, we review the synthesis of water-soluble PTs and their photophysical properties, and then highlight our efforts toward the development of PT-based optical sensors for small molecules. Mechanism studies indicate that the interplay between side-chain steric/electrostatic repulsive and interchain attractive interactions is responsible for the assembly and disassembly of water-soluble PTs in aqueous media. Consequently, the planarization/deplanarization of PT backbones provides the possibility for colorimetric and fluorescent dual detection of small bioanalytes and chemical species.