Gold and silver nanomaterials (NMs) such as nanoparticles (NPs) and nanoclusters (NCs) possessing interesting optical properties have become popular sensing materials. With strong surface plasmon resonance (SPR) absorption, extraordinary stability, ease in preparation, conjugation, and biocompatibility, Au NPs are employed to develop sensitive and selective sensing systems for a variety of analytes. However, small sizes of Au and Ag NCs with interesting photoluminescence (PL) properties are used in many PL-based sensing systems for the detection of important analytes. In addition, many bimetallic AuM NMs possessing strong catalytic activity are used to develop highly sensitive fluorescent sensors. This review article is categorized in four sections based on the NMs used in the sensing systems, including Au NPs, bimetallic AuM NMs, Au NCs, and DNA-Ag NCs. In each section, synthetic strategies and optical properties of the NMs are provided briefly, followed by emphasis on their analytical applications in the detection of small molecules, metal ions, DNA, proteins, and cells. Current challenges and future prospects of these NMs-based sensing systems will be addressed.