The Limulus amoebocyte lysate (LAL) test is the most sensitive and reliable assay for the detection of trace amounts of bacterial endotoxins (lipopolysaccharides, or LPS), and is an accepted in vitro alternative to the rabbit pyrogen test for evaluations of parenteral drugs, biological products, and medical devices. There are three principal LAL tests, which can be categorized as both semi-quantitative and quantitative methods, including gel-clot, turbidimetric, and chromogenic assays. Since the 1970s, these tests have been successfully formulated and commercialized by US and Japanese manufacturers. More recently, in addition to the recombinant factor C-based assay, a novel product containing all of the recombinant coagulation factors from horseshoe crab has been developed, which may lead to the creation of a next generation LAL alternative. Furthermore, there are antimicrobial peptides called “host defense peptides (HDPs)” that play a key role in innate immune responses. The LAL test for HDP-related studies is challenging, because the active site of endotoxin could be masked by the binding with HDPs. Thus, it is very important to properly evaluate the actions of HDPs (human defensins and cathelicidin peptide LL-37) such as the neutralization of LPS, immunostimulatory functions, and anti-endotoxin activity. Moreover, sensitive detection of LPS in cell culture media should be conducted to address the problem of endotoxin contamination in the media. Here, we discuss the progress of LAL-based endotoxin assay technologies, as well as their applications and limitations, with a focus on innovative functional studies of HDPs.