Polymer-based optical sensors represent a transformative advancement in biomedical diagnostics and monitoring due to their unique properties of flexibility, biocompatibility, and selective responsiveness. This review provides a comprehensive overview of polymer-based optical sensors, covering the fundamental operational principles, key insights of various polymer-based optical sensors, and the considerable impact of polymer integration on their functional capabilities. Primary attention is given to all-polymer optical fibers and polymer-coated optical fibers, emphasizing their significant role in “enabling” biomedical sensing applications. Unlike existing reviews focused on specific polymer types and optical sensor methods for biomedical use, this review highlights the substantial impact of polymers as functional materials and transducers in enhancing the performance and applicability of various biomedical optical sensing technologies. Various sensor configurations based on waveguides, luminescence, surface plasmon resonance, and diverse types of polymer optical fibers have been discussed, along with pertinent examples, in biomedical applications. This review highlights the use of biocompatible, hydrophilic, stimuli-responsive polymers and other such functional polymers that impart selectivity, sensitivity, and stability, improving interactions with biological parameters. Various fabrication techniques for polymer coatings are also explored, highlighting their advantages and disadvantages. Special emphasis is given to polymer-coated optical fiber sensors for biomedical catheters and guidewires. By synthesizing the latest research, this review aims to provide insights into polymer-based optical sensors’ current capabilities and future potential in improving diagnostic and therapeutic outcomes in the biomedical field.