An abrupt change in optical transmission characteristic of a graphene oxide (GO) coated optical planar waveguide was observed. This observation was based on the peculiar characteristics of the graphene oxide film, namely its high transverse-electric polarized light propagation loss, highly selective permeability of water, and change in optical propagation characteristic in the presence of water. The as-fabricated GO-coated optical waveguide showed a large polarization dependent loss of ~32 dB in the C-band optical fiber communication window (1550 nm). The response of the proposed sensor was first tested by using water. When a drop of water was applied onto the GO coating, the large polarization dependent loss was fully suppressed almost instantaneously. This effect was reversible as the polarization dependent loss was restored after complete water evaporation from the GO coating. All-optical measurement of water content in alcohol was then demonstrated by using the GO-coated optical waveguide. By analyzing the drying profile of the water-alcohol mixture, water content in the range of 0.2 volume % – 100 volume % could be measured. These measurements were carried out by using solution volume of 1.0 μL only. The all-optical sensing nature of the proposed sensor has potential applications in in-situ monitoring of water content in alcohol.