Quantum dots (QDs) are excellent donors in Förster resonance energy transfer (FRET) based sensors because of their broad absorption and narrow symmetric emission. However, the strict requirement of a short donor–acceptor distance to achieve high FRET (hence sensitivity) has posed a significant challenge for QD-FRET-based sensors due to challenges associated with the preparation of QD conjugates that are both compact and highly stable. Consequently, most robust QD-FRET sensors are often too bulky to produce FRET efficiently, especially at low target-to-QD copy numbers. They have largely relied on increasing the target:QD ratio to achieve high FRET, making them undesirable and inefficient in situations of low target:QD copy numbers. Herein we report our work on the preparation of stable, compact and water-soluble QDs and their subsequent use in making compact, functional QD-DNA-based smart nanoparticle sensors for labelled and label-free DNA and protein detection. We have developed two strategies to prepare QD-DNA sensors: 1) via QD-thiolated DNA self-assembly, and 2) via covalent coupling between DNA and a QD surface ligand functional group. We found that thiolated DNA (fluorophore labelled) can self-assemble onto a 3-mercaptopropionic acid-capped QDs to produce highly efficient FRET (∼80%) at a DNA:QD ratio of 1 : 1. However, this system suffers from strong non-specific adsorption and the self-assembled single-stranded (ss) DNA target is unable to hybridise to its complementary probe. More recently, we found that a dihydrolipoic acid-capped QD-ssDNA self-assembled system can hybridise to a labelled complementary probe to produce efficient FRET that can be exploited for labelled DNA probe quantification. Further, incorporating an anti-thrombin DNA aptamer to this system leads to a QD-DNA aptamer sensor that can specifically detect a 10 nM unlabelled protein probe (thrombin). The non-specific adsorption problem can be eliminated by introducing a poly(ethylene glycol) (PEG) linker to the QD capping ligands or by capping the QD with a chelating dendritic ligand. The resulting QD-DNA sensors can specifically detect 1 nM unlabelled or 35 pM labelled DNA probes using QD-sensitised dye FRET signals on a conventional fluorimeter. Extension of the DNA target to other functional DNAs or DNA/RNA aptamers should allow the development of a multi-functional QD-DNA platform suitable for biosensing, disease diagnosis and therapeutic applications.