Mammalian cells are inherently capable of sensing extracellular environmental signals and activating complex biological functions on demand. Advances in synthetic biology have made it possible to install additional capabilities, which can allow cells to sense the presence of custom biological molecules and provide defined outputs on demand. When implanted/infused in patients, such engineered cells can work as intrabody "doctors" that diagnose disease states and produce and deliver therapeutic molecules when and where necessary. The key to construction of such theranostic cells is the development of a range of sensor systems for detecting various extracellular environmental cues that can be rewired to custom outputs. In this review, we introduce the state-of-art engineering principles utilized in the design of sensor systems to detect soluble factors and also to detect specific cell contact, and we discuss their potential role in treating intractable diseases by delivering appropriate therapeutic functions on demand. We also discuss the challenges facing these emerging technologies.