The liquid crystalline state of matter arises from orientation-dependent, non-covalent interactions between molecules within condensed phases. Because the balance of intermolecular forces that underlies the formation of liquid crystals (LCs) is delicate, this state of matter can, in general, be easily perturbed by external stimuli (such as an electric field in a display). In this review, we present an overview of recent efforts that have focused on exploiting the responsiveness of LCs as the basis of chemical and biological sensors. In this application of LCs, the challenge is to design liquid crystalline systems that undergo changes in organization when perturbed by targeted chemical and biological species of interest. The approaches described below revolve around the design of interfaces that selectively bind targeted species, thus leading to surface-driven changes in the organization of the LCs. Because LCs possess anisotropic optical and dielectric properties, a range of different methods can be used to read out the changes in organization of LCs that are caused by targeted chemical and biological species. This review focuses on principles for LC-based sensors that provide an optical output.