Carbon nanofibers (CNFs) display colossal potential in different fields like energy, catalysis, biomedicine, sensing, and environmental science. CNFs have revealed extensive uses in various sensing platforms due to their distinctive structure, properties, function, and accessible surface functionalization capabilities. This review presents insight into various fabrication methods for CNFs like electrospinning, chemical vapor deposition, and template methods with merits and demerits of each technique. Also, we give a brief overview of CNF functionalization. Their unique physical and chemical properties make them promising candidates for the sensor applications. This review offers detailed discussion of sensing applications (strain sensor, biosensor, small molecule detection, food preservative detection, toxicity biomarker detection, and gas sensor). Various sensing applications of CNF like human motion monitoring and energy storage and conversion are discussed in brief. The challenges and obstacles associated with CNFs for futuristic applications are discussed. This review will be helpful for readers to understand the different fabrication methods and explore various applications of the versatile CNFs.