Almost since its discovery, Limulus amoebocyte lysate (LAL) testing has been an important part of the pharmaceutical quality control toolkit. It allows for in vitro endotoxin testing, which has replaced tests using animals, such as using rabbits’ thermal response to judge pyrogenicity of test samples, thus leading to a less expensive and faster test of parenteral pharmaceuticals and medical devices that contact blood or cerebrospinal fluid. However, limited by the detection mechanisms of the LAL assays currently used in industry, further improvement in their performance is challenging. To address the growing demand on optimizing LAL assays for increased test sensitivity and reduced assay time, we have developed an LAL assay approach based on a detection mechanism that is different from those being used in industry, namely, gel-clot, turbidimetric, and chromogenic detection. Using a unique open-microcavity photonic-crystal biosensor to monitor the change in the refractive index due to the reaction between LAL regents and endotoxins, we have demonstrated that this approach has improved the LAL assay sensitivity by 200 times compared with the commercial standard methods, reduced the time needed for the assay by more than half, and eliminated the necessity to incubate the test samples. This study opens up the possibility of using the significantly improved LAL assays for a wide range of applications.