We report the lauryl sulphate (LS) modified gold nanoparticles (AuNPs) as a localized surface plasmon resonance (LSPR) based chemical sensor for the colorimetric detection of arsenic in water samples. This colorimetric LSPR based detection of arsenic found to be a simple, selective, sensitive, and can be applied at the sample source. The method was based on the color change of AuNPs from pink to blue with the addition of arsenic to NPs that caused the shift in LSPR band due to the inter-particle coupling effect. The best performance for the detection of arsenic was obtained when the pH of the solution was 5.0, concentration of NPs was 25μM and the reaction time was 5min. The calibration curve was linear over 5–500μgL−1 arsenic with limit of detection (LOD) of 2μgL−1 and correlation estimation (r2) of 0.994. The optimized method was successfully applied for the determination of arsenic in contaminated water samples. The concentration of arsenic found in water samples of central India was in the range 15–350μgL−1 which was found higher than WHO tolerance limit value of 10μgL−1 (TLV).