Microbial biosensors are compact, portable, cost effective, and simple to use, making them seem eminently suitable for the in situ monitoring of environmental pollution. One promising approach for such applications is the fusion of reporter genes with regulatory genes that are dose-dependently responsive to the target chemicals or physiological signals. Their biosensor capabilities, such as target range and sensitivity, could be improved by modification of regulatory genes. Recent uses of such genetically engineered microbial biosensors include the development of portable biosensor kits and high-throughput cell arrays on chips, optic fibers, or other platforms for on-site and on-line monitoring of environmental pollution. This mini-review discusses recent advances in microbial biosensors and their future prospects, with a focus on the development and application of genetically modified microbial biosensors for in situ environmental monitoring.