Nowadays, arsenic (III) contamination of drinking water is a global issue. Laboratory and instrument-based techniques are typically used to detect arsenic in water, with an accuracy of 1 ppb. However, such detection methods require a laboratory-based environment, skilled labor, and additional costs for setup. As a result, several metal-based nanoparticles have been studied to prepare a cost-effective and straightforward detector for arsenic (III) ions. Among the developed strategies, colorimetric detection is one of the simplest methods to detect arsenic (III) in water. Several portable digital detection technologies make nanoparticle-based colorimetric detectors useful for on-site arsenic detection. The present review showcases several metal-based nanoparticles that can detect arsenic (III) colorimetrically at a concentration of ~0.12 ppb or lower in water. A literature survey suggests that biomolecule-based metal nanoparticles could serve as low-cost, facile, susceptible, and eco-friendly alternatives for detecting arsenic (III). This review also describes future directions, perspectives and challenges in developing this alternative technology, which will help us reach a new milestone in designing an effective arsenic detector for commercial use.