Sensors are applied to many fields nowadays because of their high sensitivity, low cost, time-saving, user-friendly, and excellent selectivity. Current biomedical and pharmaceutical science has one focus on developing nanoparticle-based sensors, especially biopolymeric nanoparticles. Alginate is a widely used biopolymer in a variety of applications. The hydrogel-forming characteristic, the chemical structure with hydroxy and carboxylate moieties, biocompatibility, biodegradability, and water solubility of alginate have expanded opportunities in material and biomedical sciences. Recently, research on alginate-based nanoparticles and their applications has begun. These materials are gaining popularity because of their wide usage potential in the biomedical and pharmaceutical fields. Many review papers describe applications of alginate in the drug delivery field. The current study covers the structural and physicochemical properties of alginate-based nanoparticles. The prospective applications of alginate-based nanomaterials in various domains are discussed, including drug delivery and environmental sensing applications for humidity, heavy metals, and hydrogen peroxide. Moreover, biomedical sensing applications of alginate-based nanoparticles regarding various analytes such as glucose, cancer cells, pharmaceutical drugs, and human motion will also be reviewed in this paper. Future research scopes highlight existing challenges and solutions.