Ultrasensitive detection of toxins by nanoparticle–fluorophore interaction has been studied extensively in the past decade. The present study highlights the detection of formaldehyde based on fluorescence turn-on induced by NADH mediated GNP synthesis. The growth solution consisted of CTAB, Au³⁺ and fluorescein dye. Extensive fluorescence quenching was observed upon interaction of fluorescein with the growth solution. However, addition of NADH led to dose dependent fluorescence turn-on. This behavior was successfully employed for the ultrasensitive detection of formaldehyde (0.01 pg to 300 pg mL⁻¹ with R² = 0.9439) as a function of NADH using formaldehyde dehydrogenase enzyme. Metal ion interactions with the proposed system were also studied. We propose that the initial fluorescence quenching is due to CTAB–fluorescein–Au³⁺ interaction. Addition of NADH to the growth solution led to initiation of gold nanoparticle synthesis by the reduction of Au³⁺ to Au⁰ that induced more polarity on the CTAB micellar surface causing fluorescein–CTAB transition and turn-on fluorescence, further leading to the detection of NADH. Also, at increased NADH/formaldehyde concentration, a fluorescence decrease was observed which is due to the efficient synthesis of gold nanoparticles leading to spectral overlap. The proposed method of Au³⁺ reduction coupled to fluorescence turn-on can be applied for monitoring NADH dependent dehydrogenase reactions at ultrasensitive levels.