Two examples of the use of biocolloidal interactions for on chip synthesis of materials and biosensing will be presented and discussed. In the first part we will demonstrate how biocomposite materials can be fabricated by precise electric field driven co-assembly of live cells and synthetic colloidal particles. The process is based on dielectrophoresis (DEP), mobility and interaction of particles in AC electric fields. Live cells such as baker's yeast and mouse fibroblasts were co-assembled with colloidal particles into freely suspended 1D chains and 2D membranes. Experimental observations of the DEP co-assembly dynamics showed that particles smaller in size than the cells were drawn and captured into the cell junctions by the electric field. The process was modeled by a combination of electrostatic field computation and MD-type of particle motion simulation. Magnetic microparticles conjugated with lectins could be used to bind the cells irreversibly via bio-specific lectin-saccharide interactions. The cell membranes and chains formed could be manipulated by magnetic field and interfaced with on-chip electrodes. Such functional biomagnetic cell-particle assemblies may find applications in sensors, microassays, microsurgery, or as responsive biomaterials. In the second part of the talk we will present a simple new technique for the on-chip detection of antigen induced binding of particles coated with antibodies. The detection of antigen-induced agglutination is performed by impedance measurement through arrays of microelectrodes interfacing the microchamber with the particle suspension.