An optical bio-sensor is built based on an infrared chalcogenide fiber coated with live cells. The fiber is immersed in an aqueous media appropriate for cell viability. The response of the cells to small quantities of toxicant can be monitored spectroscopically. The properties of chalcogenide fibers used for cell-based biosensors are investigated. The chemical stability of Te-As-Se fibers in aqueous media is shown to depend on the previous storage time of the fiber. Older fibers are shown to generate an oxide layer during extended exposure to air. This layer readily dissolves in aqueous solution and causes the release of As in the cell environment. The release of As during dissolution of the oxide layer is measured with ICP-MS and is shown to be complete after a couple hours. Fresh fibers do not show any detectable oxide layer and show excellent stability in aqueous solution. The surface roughness of old and fresh fibers is investigated with AFM before and after dissolution in aqueous media. Old fibers immersed in solution show sizable roughness due to the oxide surface layer dissolution. Fresh fibers do not show any detectable changes even after extended immersion in aqueous solution. The toxicity of As to various types of vertebrate cells is quantified using a colorimetric assay. Old fibers are shown to be notably toxic due to As released during dissolution. The fiber toxicity is shown to decrease when the fibers are previously washed in solution. The toxicity of the resulting wash water is then shown to increase due to the increase in As concentration.