The eco-toxicological indicators used to evaluate soil quality complement the physico-chemical criteria employed in contaminated site remediation, but their cost, time, sophisticated analytical methods and in-situ inapplicability pose a major challenge to rapidly detect and map the extent of soil contamination. This paper describes a sensor-based approach for measuring potential (substrate-induced) microbial respiration in diesel-contaminated and non-contaminated soil and hence, indirectly evaluates their microbial activity. A simple CO2 sensing system was developed using an inexpensive non-dispersive infrared (NDIR) CO2 sensor and was successfully deployed to differentiate the control and diesel-contaminated soils in terms of CO2 emission after glucose addition. Also, the sensor system distinguished glucose-induced CO2 emission from sterile and control soil samples (p ≤ 0.0001). Significant effects of diesel contamination (p ≤ 0.0001) and soil type (p ≤ 0.0001) on glucose-induced CO2 emission were also found. The developed sensing system can provide in-situ evaluation of soil microbial activity, an indicator of soil quality. The system can be a promising tool for the initial screening of contaminated environmental sites to create high spatial density maps at a relatively low cost.