•We provide a comprehensive overview on earth observation (EO) indicators for biodiversity (BD).•We focus on taxonomic, structural and functional biodiversity.•EO is not able to record BD according to taxonomical classifications of in-situ species.•Spectral traits (ST) and spectral trait variations (STV) are the basis concept of EO to quantify BD.•Coupling different approaches, developing sensor networks and new concepts, tools and models in handling complex and big data are important. Impacts of human civilization on ecosystems threaten global biodiversity. In a changing environment, traditional in situ approaches to biodiversity monitoring have made significant steps forward to quantify and evaluate BD at many scales but still, these methods are limited to comparatively small areas. Earth observation (EO) techniques may provide a solution to overcome this shortcoming by measuring entities of interest at different spatial and temporal scales. This paper provides a comprehensive overview of the role of EO to detect, describe, explain, predict and assess biodiversity. Here, we focus on three main aspects related to biodiversity − taxonomic diversity, functional diversity and structural diversity, which integrate different levels of organization − molecular, genetic, individual, species, populations, communities, biomes, ecosystems and landscapes. In particular, we discuss the recording of taxonomic elements of biodiversity through the identification of animal and plant species. We highlight the importance of the spectral traits (ST) and spectral trait variations (STV) concept for EO-based biodiversity research. Furthermore we provide examples of spectral traits/spectral trait variations used in EO applications for quantifying taxonomic diversity, functional diversity and structural diversity. We discuss the use of EO to monitor biodiversity and habitat quality using different remote-sensing techniques. Finally, we suggest specifically important steps for a better integration of EO in biodiversity research. EO methods represent an affordable, repeatable and comparable method for measuring, describing, explaining and modelling taxonomic, functional and structural diversity. Upcoming sensor developments will provide opportunities to quantify spectral traits, currently not detectable with EO, and will surely help to describe biodiversity in more detail. Therefore, new concepts are needed to tightly integrate EO sensor networks with the identification of biodiversity. This will mean taking completely new directions in the future to link complex, large data, different approaches and models.