There has been a tremendous growth in the field of diagnostic sensors and environmental gas sensors in the past 10 years. The global market for commercial sensors was estimated to be aroundUS$12 billion in 2015. A diagnostic sensor or a biosensor is used for recognition of molecules such as proteins, enzymes, or metabolites from body fluids. Gas sensing has become an active field of research that has far reaching implication into the future. From the viewpoint of global climate change, air quality, and toxic gas detection, gas sensors are being researched both on the industrial and on the university levels to provide tools to better understand these applications and more. The environmental gas sensors can be used for detection of gas,VOCs, or trace elements from environment. Both biosensors and environmental sensors have evolved through multiple generations based on the advancements of the functional materials that are being used for detection of the biomolecule or environmental gas of interest. Functional materials can be characterized as materials possessing special properties such as magnetic, piezoelectric, high tensile strength, capacitive energy storage, and so on. The enrichment in the field of nanotechnology in terms of growth, fabrication, and integration of nanomaterials into a sensor device has set a new paradigm for the form and function of sensor devices. This chapter reviews the current state‐of‐the‐art nanomaterial technology leveraged both for the development of protein, hormone, and enzyme biosensors and for the development of environmental gas sensors.