Two competitive fiber optic sensors for the rapid, sensitive, and highly selective detection of mercury in water are designed, fabricated, and evaluated. A wavelength-modulated sensor based on an etched single-mode–multimode–single-mode (E-SMS) optical fiber structure and an intensity-modulated sensor based on fiber optics with a slanted end were fabricated by readily reproducible methods. The sensors were activated with a nanostructured chitosan/maghemite ( CS/Fe 2 O 3 ) composite thin film for the selective detection of mercury ions ( Hg 2+ ) in water. The functionalized sensors were implemented to experimentally validate the potential of CS/Fe 2 O 3 thin film for optical sensing of Hg 2+ in drinking water. The sensor based on the E-SMS structure exhibited a wavelength-modulated response with a sensitivity of up to 290 pm/(µg/mL), and the sensor based on the slanted end structure showed an intensity-modulated response with a sensitivity of −0.07dBm/(µg/mL) . Validation of the experimental assay method proves the ability to selectively detect chemical interactions as low as 1 ng/mL (one part per billion) of Hg 2+ in water for both sensors. The high specificity of the two sensors was demonstrated by evaluating their responses to a number of potentially interfering metal ions in water. These sensors are cost-effective, simple to construct, and easy to implement, which makes them very promising for the on-site detection and monitoring of mercury in bodies of water.