One of the most common problems many babies encounter is neonatal jaundice. The symptoms are yellowing of the skin or eyes because of bilirubin (from above 2.0 to 2.5 mg/dL in the blood). If left untreated, it can lead to serious neurological complications. Traditionally, jaundice detection has relied on invasive blood tests, but developing non-invasive biosensors has provided an alternative approach. This systematic review aims to assess the advancement of these biosensors. This review discusses the many known invasive and non-invasive diagnostic modalities for detecting neonatal jaundice and their limitations. It also notes that the recent research and development on non-invasive biosensors for neonatal jaundice diagnosis is still in its early stages, with the majority of investigations being in vitro or at the pre-clinical level. Non-invasive biosensors could revolutionize neonatal jaundice detection; however, a number of issues still need to be solved before this can happen. These consist of in-depth validation studies, affordable and user-friendly gadgets, and regulatory authority approval. To create biosensors that meet regulatory requirements, additional research is required to make them more precise and affordable.