Mercury ion (Hg2+) is a universal pollutant and its detection is crucial for public healthcare. In this study, we developed a novel fluorescent biosensor by construction of a protein fusion between the mercury‐sensing transcription factor MerR and enhanced yellow fluorescent protein (EYFP). Hg2+‐induced conformational change of MerR was transduced into fluorescence signal. Fluorescence intensity of the biosensor protein decreased with increasing concentrations of Hg2+ and a linear response was obtained in the range of 0.5–40 nM. The limit of detection was 0.5 nM, which was much lower than the maximum allowed level in water. The biosensor specificity was highly dependent on type and concentration of metal ion. The biosensor exhibited high specificity in a mixture of metal ions at 0.5 nM concentration. However, the interference effect was more pronounced at 40 nM concentration of metal ions. The measurement was completed in less than 1 Min with no need for sample preparation or preincubation steps. The biosensor achieved accurate and reliable detection in the spiked drinking water sample, as validated by the inductively coupled plasma optical emission spectrometry.