In this study, a miniaturized methodology was introduced by combining mobile phone-based on-drop sensing with headspace single drop microextraction for determining formaldehyde as a model analyte in textile and wastewater samples. A simple device was constructed to perform sample extraction and analyte detection. Formaldehyde was simultaneously extracted into an aqueous droplet and converted to a color compound. A mobile phone was utilized to detect the developed color and image analysis. The key experimental parameters affecting the sensitivity of the method including device design considerations, drop composition, extraction temperature, ionic strength and extraction time were investigated and optimized. The method showed the linear range of 0.3–10 mg L−1 with the detection limit of 0.1 mg L−1. The method was successfully applied for determining free formaldehyde in textile and wastewater samples with recoveries in the ranges of 80–97% and 91–99%, respectively. In comparison with the ISO 14184-1:2011 standard method, no significant difference was observed between the two methods in terms of accuracy.