This paper reports on the development of an N-doped zinc oxide nanoparticle (N–ZnO) based optical biosensor for selective urea detection. The N–ZnO nanoparticle has a particle size of 10 nm with a bandgap of 2.6 eV, and it exhibits fluorescence emission at 385 nm under an excitation of 340 nm. The optical sensing of N–ZnO was examined in the presence of various biomolecules such as urea, glucose, thiourea, sucrose and BSA. The fluorescence response through the electron–hole recombination energy transfer process was observed in all the N–ZnO and biomolecule combinations. The optical sensing response was selectively high for urea compared to the other aforementioned compounds. The results confirm higher sensitivity for urea detection in the presence of N–ZnO with a linear range of 2.6–26 μM at a detection limit of 4.93 ± 0.02 μM. Furthermore, the higher sensitivity and recovery of urea in the blood serum validates the efficacy of N–ZnO. The outcome of the reported work suggests that N–ZnO can be used as a promising nanomaterial for a quick-time optical biosensing system for urea detection and also as a pH sensing probe in clinical applications.