Technology for the detection of biological species has generated considerable interest in a variety of fields including healthcare, defense, food and environmental monitoring. In a biosensor, labeled specific binding partners are used to emit a detectable signal. Owing to their unique properties, nanomaterials have been proposed as a novel label category and have led to the development of new assays and new transduction mechanisms. In this article, the role of three major types of nanoscale labels (metallic, semiconductor and liposome nanoparticles) in the development of a new generation of optical, electrochemical or gravimetric biosensors will be presented. The underlying transduction principles will be briefly explained and assay strategies relying on the use of these ‘nanolabels’ will be described. The contribution to increased assay performance and sensitivity will be highlighted. Approaches towards simple, cost efficient and sensitive assays are essential to meet the demands of a growing number of applications.