Plasmonic nanoparticles (NPs) have played a significant role in the evolution of modern nanoscience and nanotechnology in terms of colloidal synthesis, general understanding of nanocrystal growth mechanisms, and their impact in a wide range of applications. They exhibit strong visible colors due to localized surface plasmon resonance (LSPR) that depends on their size, shape, composition, and the surrounding dielectric environment. Under resonant excitation, the LSPR of plasmonic NPs leads to a strong field enhancement near their surfaces and thus enhances various light-matter interactions. These unique optical properties of plasmonic NPs have been used to design chemical and biological sensors. Over the last few decades, colloidal plasmonic NPs have been greatly exploited in sensing applications through LSPR shifts (colorimetry), surface-enhanced Raman scattering, surface-enhanced fluorescence, and chiroptical activity. Although colloidal plasmonic NPs have emerged at the forefront of nanobiosensors, there are still several important challenges to be addressed for the realization of plasmonic NP-based sensor kits for routine use in daily life. In this comprehensive review, researchers of different disciplines (colloidal and analytical chemistry, biology, physics, and medicine) have joined together to summarize the past, present, and future of plasmonic NP-based sensors in terms of different sensing platforms, understanding of the sensing mechanisms, different chemical and biological analytes, and the expected future technologies. This review is expected to guide the researchers currently working in this field and inspire future generations of scientists to join this compelling research field and its branches.