Genetically-coded, fluorescence resonance energy transfer (FRET) biosensors are widely used to study molecular events from single cells to whole organisms. They are unique among biosensors because of their spontaneous fluorescence and targeting specificity to both organelles and tissues. In this review, we discuss the theoretical basis of FRET with a focus on key parameters responsible for designing FRET biosensors that have the highest sensitivity. Next, we discuss recent applications that are grouped into four common biosensor design patterns-intermolecular FRET, intramolecular FRET, FRET from substrate cleavage and FRET using multiple colour fluorescent proteins. Lastly, we discuss recent progress in creating fluorescent proteins suitable for FRET purposes. Together these advances in the development of FRET biosensors are beginning to unravel the interconnected and intricate signalling processes as they are occurring in living cells and organisms.