Gold nanoparticles (AuNPs) are some of the most extensively studied nanomaterials. Because of their unique optical, chemical, electrical, and catalytic properties, AuNPs have attracted enormous amount of interest for applications in biological and chemical detection and analysis. The purpose of this critical review is to provide the readers with an update on the recent developments in the field of AuNPs for sensing applications based on their optical properties. An overview of the optical properties of AuNPs is presented first, followed by a more detailed literature survey. As the last part of this review, we compare the advantages and disadvantages of each technique, briefly discuss their commercialization status, and some technical issues that remain to be solved in order to move the technique forward (151 references).