In situ growth of gold nanoparticles (Au NPs) was performed in an alginate gel matrix co-encapsulating Au NP seeds and glucose oxidase (GOx) for the development of a glucose-sensing platform. We observed a simultaneous growth of Au NPs in the alginate matrix through the reduction of AuCl by H2O2 on Au NP seeds. The detection of the glucose level was carried out successfully via the coupling of Au NP enlargement with the oxidation of glucose catalyzed by the immobilized GOx. The enlargement of Au NPs in the alginate matrix exhibited only a red-shift in absorbance maxima, while the generation of small Au NPs in a free solution caused a blue-shift in higher glucose concentrations. This study shows that the co-encapsulation of metal NPs and bioreceptor in a gel matrix may provide a simple route for the fabrication of an optical biosensor. Biotechnol. Bioeng. 2010;105: 210–214. © 2009 Wiley Periodicals, Inc.