Human access to safe water has become a major problem in many parts of the world as increasing human activities continue to spill contaminants into our water systems. To guarantee the protection of the public as well as the environment, a rapid and sensitive way to detect contaminants is required. In this work, a paper-based microbial fuel cell was developed to act as a portable, single-use, on-site water quality sensor. The sensor was fabricated by combining two layers of paper for a simple, low-cost, and disposable design. To facilitate the use of the sensor for on-site applications, the bacterial cells were pre-inoculated onto the device by air-drying. To eliminate any variations, the voltage generated by the microorganism before and after the air-drying process was measured and calculated as an inhibition ratio. Upon the addition of different formaldehyde concentrations (0%, 0.001%, 0.005%, and 0.02%), the inhibition ratios obtained were 5.9 ± 0.7%, 6.9 ± 0.7%, 8.2 ± 0.6%, and 10.6 ± 0.2%, respectively. The inhibition ratio showed a good linearity with the formaldehyde concentrations at R2 = 0.931. Our new sensor holds great promise in monitoring water quality as a portable, low-cost, and on-site sensor.