Nanobodies are single variable domain antibodies isolated from camelids and are rapidly distinguishing themselves as ideal recognition elements in biosensors due to their comparative stability, ease of production and isolation, and high binding affinities. However, transducing analyte binding by nanobodies in real time is challenging, as most nanobodies do not directly produce an optical or electrical signal upon target recognition. Here, we report a general strategy to fabricate sensitive and selective electrochemical sensors incorporating nanobodies for detecting target analytes in heterogeneous media, such as cell lysate. Graphite felt can be covalently functionalized with recombinant HaloTag-modified nanobodies. Subsequent encapsulation with a thin layer of a hydrogel using a vapor deposition process affords encapsulated electrodes that directly display a decrease in current upon antigen binding, without added redox mediators. Differential pulse voltammetry affords clear and consistent decreases in electrode current across multiple electrode samples for specific antigen concentrations. The change in observed current vs increasing antigen concentration follows Langmuir binding characteristics, as expected. Importantly, selective and repeatable target binding in unpurified cell lysate is only demonstrated by the encapsulated electrode, with an antigen detection limit of ca. 30 pmol, whereas bare electrodes lacking encapsulation produce numerous false positive signals in control experiments.