Robust, reliable, and quantitative detection of biomarkers at ultra-low concentration is of great importance in clinical settings. Biosensor, an analytical device used for sensitive and selective detection of biomarkers offers various advantages over the conventional clinical diagnosis, which is both time consuming and not suitable for point of care/onsite diagnosis. A revolution in the understanding and synthesis of nanomaterials in the last couple of decades contributed significantly to the development of the biosensors in terms of sensitivity, catalytic activity, biocompatibility, and robustness. Additionally, nanomaterials help in miniaturization of the sensing platform and helping in the commercial success of portable biosensor kits. Surface engineering equally contributed to the biosensor development by ensuring a reproducible and stable sensing surface, efficient analyte-biorecognition element interaction, and reduced fouling effect in biological solution. Due to nanomaterial integration and surface engineering, biosensors are now equally sensitive to the lab-based sophisticated instruments to detect a wide range of molecules of clinical significance. In this review, various types of biosensors, their designs, and their working principles have been discussed. A detailed account of various types of nanomaterials, their functionalization and characterization have also been discussed. The analytical performances of biosensors for both clinical validation and analyte detection have been incorporated here. The recent trends in advanced biosensors, such as smartphone interface for biosensing, nanozymes, lab-on-a-chip based detection methods have been discussed.