Reduced glutathione (GSH) level inside the cell is a critical determinant for cell viability. The level of GSH varies across the cells, tissues and environmental conditions. However, our current understanding of physiological and pathological GSH changes at high spatial and temporal resolution is limited due to non-availability of practicable GSH-detection methods. In order to measure GSH at real-time, a ratiometric genetically encoded nanosensor was developed using fluorescent proteins and fluorescence resonance energy transfer (FRET) approach. The construction of the sensor involved the introduction of GSH binding protein (YliB) as a sensory domain between cyan fluorescent protein (CFP; FRET donor) and yellow fluorescent protein (YFP; FRET acceptor). The developed sensor, named as FLIP-G (Fluorescence Indicator Protein for Glutathione) was able to measure the GSH level under in vitro and in vivo conditions. When the purified FLIP-G was titrated with different concentrations of GSH, the FRET ratio increased with increase in GSH-concentration. The sensor was found to be specific for GSH and also stable to changes in pH. Moreover, in live bacterial cells, the constructed sensor enabled the real-time quantification of cytosolic GSH that is controlled by the oxidative stress level. When expressed in yeast cells, FRET ratio increased with the external supply of GSH to living cells. Therefore, as a valuable tool, the developed FLIP-G can monitor GSH level in living cells and also help in gaining new insights into GSH metabolism.