Organophosphate (OP) poisoning can occur through unintentional exposure to OP pesticides, or by the deliberate release of OP nerve agents. Consequently, there is considerable interest in the development of systems that can detect and/or biodegrade these agents. The aim of this study was to generate a prototype fluorescent reporter yeast biosensor that could detect and biodegrade the model OP pesticide, paraoxon, and subsequently detect paraoxon hydrolysis. Saccharomyces cerevisiae was engineered to hydrolyze paraoxon through the heterologous expression of the Flavobacterium species opd (organophosphate degrading) gene. Global transcription profiling was subsequently used to identify yeast genes, which were induced in the presence of paraoxon, and genes, which were associated with paraoxon hydrolysis. Paraoxon-inducible genes and genes associated with paraoxon hydrolysis were identified. Candidate paraoxon-inducible promoters were cloned and fused to the yeast-enhanced green fluorescent protein (yEGFP), and candidate promoters associated with paraoxon hydrolysis were fused to the red fluorescent protein (yDsRed). The ability of the yeast biosensor to detect paraoxon and paraoxon hydrolysis was demonstrated by the specific induction of the fluorescent reporter (yEGFP and yDsRed, respectively). Biosensors responded to paraoxon in a dose- and time-dependent manner, and detection was rapid (15 to 30 min). yDsRed induction occurred only in the recombinant opd(+) strains suggesting that yDsRed induction was strictly associated with paraoxon hydrolysis. Together, these results indicate that the yeast biocatalyst-biosensor can detect and degrade paraoxon and potentially also monitor the decontamination process.