High sensitivity, high reliability, swift response, and excellent selectivity are the prerequisites for any biosensor. Due to the ability to detect minute amounts of biomolecules in real time, biosensors have applications in clinical diagnostics, pharmaceutics, and environmentally hazardous material detection. The emergence of magnetoresistive (MR) sensors, which has significantly improved the capability to precisely measure magnetic fields, has opened several possibilities to develop magnetic field sensors that can be used in biosensor applications. This device class not only fulfils the prerequisites of biological sensors but also presents the possibility of miniaturization of the biomedical testing. This places the MR sensors among the most promising candidates for Lab-on-Chip applications. In this chapter, the basic working principle of the MR sensors and their applications in biosensing are reviewed. Magnetic nanoparticles (MNPs) are an essential component of MR-based biosensors as the conversion from biological information to the magnetic signal is realized by tagging target analytes with MNPs. The strategies used for the surface functionalization of MNPs and different bioassays in conjunction with the MR based biosensor technology are also presented. Included is also a discussion about the contemporary challenges posed by this technology and an overview of the strategies to overcome these challenges.