We have developed a carbon nanotube (CNT) sensor for water vapor detection under Martian Conditions and the miniaturized electronics can be embedded in the drill bit for collecting sensor data and transmitting it to a computer wirelessly. This capability will enable the real time measurement of ice during drilling. With this real time and in-situ measurement, subsurface ice detection can be easy, fast, precise and low cost. Current methods for sensing icy deposits on Mars or the moon include volume hydrogen measurements in a 1m3 volume from a surface neutron spectrometer, optical spectral measurements to identify water spectral lines, or direct analysis of samples using mass spectroscopy. The latter two methods require samples to be on the surface or fed into an instrument. The detection limit of optical spectroscopy is ~1% water ice in a cuttings mixture. In contrast CNT sensor's detection limit is 10-6 – 10-9 and the sensors are tiny with significantly lower power usage compared to other instruments. The drill mounted CNT sensor can also detect ice as it is encountered by the drill bit at very low concentrations, obtaining fine scale information on the vertical structure of the icy material. Potentially, CNT sensors combined with drilling afford a new approach for detection and measurement of volatiles. With CIF support in 2013, we started with CNT sensors that operate under Earth conditions optimized to sense organic volatiles and developed a CNT sensor capable of detecting water vapor, requiring special coatings applied to the CNT. We characterized the sensor performance under Mars pressure (~6mbar) and temperature (-45oC) conditions, showing that it could detect small quantities of water vapor introduced into its vicinity. We compared our CNT sensor with commercially available RH sensors. The test results show that commercial sensors do not work under vacuum conditions. So, our CNT sensors exceed the performance of these commercial sensors for Martian conditions. We miniaturized the sensor, and constructed data acquisition and wireless communication electronics to fit inside a drill string. The wireless communications allows us to transmit the CNT sensor signal from the borehole without bringing wires through the rotating interface. We then constructed a simulated borehole and drill string and tested sensor performance detecting small quantities of water vapor under Martian conditions. The wireless communication board can transmit the sensor data to a USB receiver plugged into a computer for data streaming. The work remaining is to complete sensor installation into a drill string and test it drilling into icy material in a Mars environment, which requires a Mars chamber that requires use of unique Mars drill testing facilities at Honeybee Robotics. Possible applications of CNT sensors for water detection include prospecting for buried ice on the Moon, and characterizing feedstocks for ISRU on the moon or Mars. An ISRU demonstration proposal to the Mars 2020 rover has expressed interest. CNT borehole instruments that detect volatiles like methane should interest the fuels industry.