Although rational genetic engineering is nowadays the favored method for microbial strain improvement, building up mutant libraries based on directed evolution for improvement is still in many cases the better option. In this regard, the demand for precise and efficient screening methods for mutants with high performance has stimulated the development of biosensor-based high-throughput screening strategies. Genetically encoded biosensors provide powerful tools to couple the desired phenotype to a detectable signal, such as fluorescence and growth rate. Herein, we review recent advances in engineering several classes of biosensors and their applications in directed evolution. Furthermore, we compare and discuss the screening advantages and limitations of two-component biosensors, transcription-factor-based biosensors, and RNA-based biosensors. Engineering these biosensors has focused mainly on modifying the expression level or structure of the biosensor components to optimize the dynamic range, specificity, and detection range. Finally, the applications of biosensors in the evolution of proteins, metabolic pathways, and genome-scale metabolic networks are described. This review provides potential guidance in the design of biosensors and their applications in improving the bioproduction of microbial cell factories through directed evolution.