Monodispersed surfactant-free MoS2 nanoparticles with sizes of less than 2 nm were prepared from bulk MoS2 by simple ultrasonication and gradient centrifugation. The ultrasmall MoS2 nanoparticles expose a large fraction of edge sites, along with their high surface area, which lead to attractive electrocatalytic activity for reduction of H2O2. An extremely sensitive H2O2 biosensor based on MoS2 nanoparticles with a real determination limit as low as 2.5 nM and wide linear range of 5 orders of magnitude was constructed. On the basis of this biosensor, the trace amount of H2O2 released from Raw 264.7 cells was successfully recorded, and an efficient glucose biosensor was also fabricated. Since H2O2 is a byproduct of many oxidative biological reactions, this work serves as a pathway for the application of MoS2 in the fields of electrochemical sensing and bioanalysis.