Arsenic contamination in environmental waters poses global health and environmental risks. This study addresses the urgent need for rapid, selective, and sensitive detection of inorganic arsenic (iAsIII) in environmental samples. Leveraging the unique properties of gold nanoparticles (AuNPs) and the selective binding affinity of homocysteine (Hcy), we developed a novel colorimetric sensor for iAsIII detection. Our investigation elucidates the mechanism by which Hcy modifies AuNPs, enabling the selective detection of iAsIII ions through chelation between amine and carboxyl groups, primarily with the predominant species H2AsO3− at pH 12.0. Our sensor achieves high selectivity (>10‐fold) for iAsIII amid various interfering ions commonly found in environmental samples. Furthermore, we demonstrate exceptional sensitivity in detecting iAsIII, with a low limit of detection (LOD) of 67 nM, aligning with regulatory standards for arsenic concentration in drinking water. The selectivity and sensitivity of our sensor were validated through experiments with various metal ions and real water samples. In conclusion, our study presents a comprehensive understanding of the mechanism, selectivity, and sensitivity of Hcy‐modified AuNPs in detecting iAsIII, offering a versatile nanosensor platform with significant implications for environmental monitoring and public health.