Cell-based biosensors (CBBs) are becoming important tools for biosecurity applications and rapid diagnostics in food microbiology for their unique capability of detecting physiologically hazardous materials. A multi-well plate-based biosensor containing B-cell hybridoma, Ped-2E9, encapsulated in type I collagen matrix, was developed for rapid detection of viable cells of pathogenic Listeria, the toxin listeriolysin O, and the enterotoxin from Bacillus species. This sensor measures the alkaline phosphatase release from infected Ped-2E9 cells colorimetrically. Pathogenic L. monocytogenes cells and toxin preparations from L. monocytogenes or B. cereus showed cytotoxicity ranging from 24 to 98% at 3-6 h postinfection. In contrast, nonpathogenic L. innocua (F4247) and B. subtilis induced minimal cytotoxicity, ranging only 0.4-7.6%. Laser scanning cytometry and cryo-nano scanning electron microscopy confirmed the live or dead status of the infected Ped-2E9 cells in gel matrix. This paper presents the first example of a cell-based sensing system using collagen-encapsulated mammalian cells for rapid detection of pathogenic bacteria or toxin, and demonstrates a potential for onsite use as a portable detection system.