Fluorescent sensors are an essential part of the experimental toolbox of the life sciences, where they are used ubiquitously to visualize intra- and extracellular signaling. In the brain, optical neurotransmitter sensors can shed light on temporal and spatial aspects of signal transmission by directly observing, for instance, neurotransmitter release and spread. Here we report the development and application of the first optical sensor for the amino acid glycine, which is both an inhibitory neurotransmitter and a co-agonist of the N-methyl-D-aspartate receptors (NMDARs) involved in synaptic plasticity. Computational design of a glycine-specific binding protein allowed us to produce the optical glycine FRET sensor (GlyFS), which can be used with single and two-photon excitation fluorescence microscopy. We took advantage of this newly developed sensor to test predictions about the uneven spatial distribution of glycine in extracellular space and to demonstrate that extracellular glycine levels are controlled by plasticity-inducing stimuli.