The major task of modern cell biology is to identify the function and relation of the many different gene products, discovered by genomics and proteomics approaches, in the context of the living cell. To achieve this goal, an increasing toolbox of custom-designed biosensors based on fluorescent labels is available to study the molecular activities of the cellular machinery. An overview of the current status of the young field of molecular-cellular physiology is presented that includes the application of fluorescent labels in the design of biosensors and the major detection schemes used to extract their sensing information. In particular, the use of the photophysical phenomenon of Forster resonance energy transfer (FRET) as a powerful indicator of cellular biochemical events is discussed. In addition, we will point out the challenges and directions of the field and project the short-term future for the application of fluorescence-based biosensors in biology.