Water contamination by pathogens and organic pollutants is one of the major environmental problems that risk human health. Climate change with extreme weather can promote their prevalence in waters. Environmental monitoring of these pollutants in a fast, continuous, and accurate manner is of increasing demand, especially under the climate change context, but is challenged by their ubiquity and trace concentrations. Optical biosensing is one of the desired solutions owing to its rapid and accurate detection with high sensitivity. Principally, an optical biosensor recognizes these bioactive toxins and contaminants by tailored bioreceptors (e.g., aptamer, enzyme, and cells) and transduces the biological response to optical signals. Research efforts have been made on tailoring bioreceptors and enhancing signal transducing by nanoparticles. This study comprehensively reviewed the mechanisms of optical biosensing and the recent development of bioreceptors and nanomaterials on the enhancement for the rapid, easy, and accurate analysis of emerging contaminants in water. The advantages and challenges on sensitivity, selectivity, and durability of biosensors were discussed along with the opportunities and development strategies.