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Capping agents (organic ligands, polymers, and surfactants) are pivotal for stabilizing nanoparticles; however, they may influence the surface chemistry, as well as the physico-chemical and biological characteristics, of gold nanostar (AuNS)-based biosensors. In this study, we proved that various capping agents affected capped and bioconjugated AuNS stability, functionality, biocatalysis, and colorimetric readouts. Capped and bioconjugated AuNSs were applied as localized surface plasmon resonance (LSPR)-based H2O2 sensors using glucose oxidase (GOx) as a model enzyme. Furthermore, our analyses revealed that the choice of capping agent influenced the properties of the AuNSs, their stability, and their downstream applications. Our analyses provide new insights into factors governing the choice of capping agents for gold nanostars and their influences on downstream applications with conjugated enzymes in confined environments.