Carbon nanotubes (CNTs) promise to advance a number of real-world technologies. Of these applications, they are particularly attractive for uses in chemical sensors for environmental and health monitoring. However, chemical sensors based on CNTs are often lacking in selectivity, and the elucidation of their sensing mechanisms remains challenging. This review is a comprehensive description of the parameters that give rise to the sensing capabilities of CNT-based sensors and the application of CNT-based devices in chemical sensing. This review begins with the discussion of the sensing mechanisms in CNT-based devices, the chemical methods of CNT functionalization, architectures of sensors, performance parameters, and theoretical models used to describe CNT sensors. It then discusses the expansive applications of CNT-based sensors to multiple areas including environmental monitoring, food and agriculture applications, biological sensors, and national security. The discussion of each analyte focuses on the strategies used to impart selectivity and the molecular interactions between the selector and the analyte. Finally, the review concludes with a brief outlook over future developments in the field of chemical sensors and their prospects for commercialization.