Formaldehyde, a highly reactive carbonyl species, has been widely used in day-to-day life owing to its numerous applications in essential commodities, etc.; the extrusion of formaldehyde from these sources basically leads to increased formaldehyde levels in the environment. Additionally, formaldehyde is endogenously produced in the human body via several biological processes. Considering the adverse effects of formaldehyde, it is highly important to develop an efficient and reliable method for monitoring formaldehyde in environmental and biological samples. Several chemodosimeters (reaction-based sensing probes) have been designed and synthesized to selectively detect the presence of formaldehyde utilizing the photophysical properties of molecules. In this review, we have comprehensively discussed the recent advances in the design principles and sensing mechanisms of developed probes and their biological/environmental applications in selective formaldehyde detection and imaging endogenous formaldehyde in cells. We have summarized the literature based on three different categories: (i) the Schiff base reaction, (ii) the 2-aza-Cope sigmatropic rearrangement reaction and (iii) miscellaneous approaches. In all cases, reactions are accompanied by changes in color and/or emission that can be detected by the naked eye.