Since the discovery of biosensor, continuous efforts are being made to design and develop novel biosensing systems of reduced form factor and high performance. State-of-art biosensing technology is the least component-based and tunable outcome depends on the selection of bio-sensing materials. Among various smart-electro-active nanostructures sensing materials, liquid crystals (LCs) are emerging as a choice of materials to develop efficient biosensor for targeted biomarkers detection. In the modern world of science and technology, LC materials have exhibited significant importance as promising materials in the various display as well as in non-display (optical devices based on LC) applications. Most of the displays currently used and available in the market are based mainly on LC technology. Besides the parent area of electronic displays, advancements have been made to tune the potentials of LC materials properties to develop biosensors of desired performance. Due to easily perturbed by external stimulation and species including bioactive or analytes project LC-based platform suitable for fabricate simple, efficient and cost-effective biosensors. This review article is an effort to describe the advancements in LC and nanotechnology-assisted LC systems for developing an efficient biosensor of tunable performance. The biosensing mechanism associated with nanotechnology-assisted LC-based sensing systems, challenges in the state-of-art technology, and future direction required to develop a LC-based analytical diagnostics tool are also the focus of this report. We believe that this review will serve as a guideline to researchers who aim to fabricate a nanotechnology-assisted LC materials-based biosensor for rapid, cost-effective, selective diagnostics of a targeted disease for health care management.