We developed a liquid crystal (LC)-based sensor system for detecting formaldehyde in aqueous solutions. In this system, nematic LCs were doped with 4′-pentyl-4-biphenylamine (PBA), which acts as the amphiphilic molecule to align at LC/aqueous interface. Such alignment induced the homeotropic orientation of LCs and a dark signal was observed under polarized light. Formaldehyde in the aqueous solutions would react with the amine group of PBA to form corresponding imine, which reduced the amount the PBA at LC/aqueous interface. As a result, the orientation of LCs was disrupted and a dark-to-bright transition of the LC images was observed. By using this mechanism, 0.5 mM of formaldehyde can be detected in 10 min with good selectivity. Moreover, we demonstrated that this system can be applied to detect formaldehyde in commercial facial toners with the limit of detection (LOD) of 30 mM, which is below the safety level of cosmetic products regulated by USA and the European Union. Because the LC-based sensor system is cost-effective and easy to use, while its signals can be simply differentiated through the naked-eye under ambient light, it shows great potential for the applications of formaldehyde detection in the daily necessities for general family.