As the COVID-19 pandemic continues, there is an imminent need for rapid diagnostic tools and effective antivirals targeting SARS-CoV-2. We have developed a novel bioluminescence-based biosensor to probe a key host-virus interaction during viral entry: the binding of SARS-CoV-2 viral spike (S) protein to its receptor, angiotensin-converting enzyme 2 (ACE2). Derived from Nanoluciferase binary technology (NanoBiT), the biosensor is composed of Nanoluciferase split into two complementary subunits, Large BiT and Small BiT, fused to the Spike S1 domain of the SARS-CoV-2 S protein and ACE2 ectodomain, respectively. The ACE2-S1 interaction results in reassembly of functional Nanoluciferase, which catalyzes a bioluminescent reaction that can be assayed in a highly sensitive and specific manner. We demonstrate the biosensor's large dynamic range, enhanced thermostability and pH tolerance. In addition, we show the biosensor's versatility towards the high-throughput screening of drugs which disrupt the ACE2-S1 interaction, as well as its ability to act as a surrogate virus neutralization assay. Results obtained with our biosensor correlate well with those obtained with a Spike-pseudotyped lentivirus assay. This rapid in vitro tool does not require infectious virus and should enable the timely development of antiviral modalities targeting SARS-CoV-2 entry.