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Water quality issues remain a major cause of global water insecurity, and real-time low-cost monitoring solutions are central to the remediation and management of water pollution. Optical sensors, based on fluorescence, absorbance, scattering and reflectance-based principles, provide effective water quality monitoring (WQM) solutions. However, substantial challenges remain to their wider adoption across scales and environments amid cost and calibration-related concerns. This review discusses the current and future challenges in optical water quality monitoring based on multi-peak fluorescence, full-spectrum absorbance, light-scattering and remotely sensed surface reflectance. We highlight that fluorescence-based sensors can detect relatively low concentrations of aromatic compounds (e.g., proteins and humic acids) and quantify and trace organic pollution (e.g., sewage or industrial effluents). Conversely, absorbance-based sensors (Ultraviolet-Visible-Infra-red, UV-VIS-IR) are suitable for monitoring a wider range of physiochemical variables (e.g., nitrate, dissolved organic carbon and turbidity). Despite being accurate under optimal conditions, measuring fluorescence and absorbance can be demanding in dynamic environments due to ambient temperature and turbidity effects. Scattering-based turbidity sensors provide a detailed understanding of sediment transport and, in conjunction, improve the accuracy of fluorescence and absorbance measurements. Recent advances in micro-sensing components such as mini-spectrometers and light emitting diodes (LEDs), and deep computing provide exciting prospects of in-situ full-spectrum analysis of fluorescence (excitation-emission matrices) and absorbance for improved understanding of interferants to reduce the signal-to-noise ratio, improve detection accuracies of existing pollutants, and enable detection of newer contaminants. We examine the applications combining in-situ spectroscopy and remotely sensed reflectance for scaling Optical WQM in large rivers, lakes and marine bodies to scale from point observations to large water bodies and monitor algal blooms, sediment load, water temperature and oil spills. Lastly, we provide an overview of future applications of optical techniques in detecting emerging contaminants in treated and natural waters. We advocate for greater synergy between industry, academia and public policy for effective pollution control and water management.