Real-time imaging of gene expression in living cells has the potential to significantly impact clinical and laboratory studies of cancer, including cancer diagnosis and analysis. Molecular beacons (MBs) provide a simple and promising tool for the detection of target mRNA as tumor markers due to their high signal-to-background ratio, and their improved specificity in detecting point mutations. However, the harsh intracellular environment does limit the sensitivity of MB-based gene detection. Specifically, MBs bound to target mRNAs cannot be distinguished from those degraded by nucleases, or opened due to non-specific interactions. To overcome this difficulty, we have developed a novel dual FRET molecular beacons approach in which a pair of molecular beacons, one with a donor fluorophore and a second with an acceptor fluorophore, hybridize to adjacent regions on the same target resulting in fluorescence resonance energy transfer (FRET). The detection of a FRET signal leads to a substantially increased signal-to-background ratio compared with that in single molecular beacon assays and enables discrimination between fluorescence due to specific probe/target hybridization and a variety of false-positive events. We have performed systematic in-solution and cellular studies of dual FRET molecular beacon and demonstrated that this new approach allows for real-time imaging of gene expression in living cells.