Optical detection continues to dominate detection methods in microfluidics due to its noninvasive nature, easy coupling, rapid response, and high sensitivity. In this review, we summarize two aspects of recent developments in optical detection methods on microfluidic chips. The first aspect is free-space (off-chip) detection on the microchip, in which the conventional absorption, fluorescence, chemiluminescence, surface plasmon resonance, and surface enhanced Raman spectroscopies are involved. The second aspect is the optofluidic (inside-chip) detection. Various miniaturized optical components integrated on the microfluidic chip, such as waveguide, microlens, laser, and detectors are outlined.