In this work, a fluorescent sensing strategy was developed for the detection of mercury(II) ions (Hg²⁺) in aqueous solution with excellent sensitivity and selectivity using a target-induced DNAzyme cascade with catalytic and molecular beacons (CAMB). In order to construct the biosensor, a Mg²⁺-dependent DNAzyme was elaborately designed and artificially split into two separate oligonucleotide fragments. In the presence of Hg²⁺, the specific thymine–Hg²⁺–thymine (T–Hg²⁺–T) interaction induced the two fragments to produce the activated Mg²⁺-dependent DNAzyme, which would hybridize with a hairpin-structured MB substrate to form the CAMB system. Eventually, each target-induced activated DNAzyme could catalyze the cleavage of many MB substrates through true enzymatic multiple turnovers. This would significantly enhance the sensitivity of the Hg²⁺ sensing system and push the detection limit down to 0.2 nM within a 20 min assay time, much lower than those of most previously reported fluorescence assays. Owning to the strong coordination of Hg²⁺ to the T–T mismatched pairs, this proposed sensing system exhibited excellent selectivity for Hg²⁺ detection, even in the presence of 100 times of other interferential metal ions. Furthermore, the applicability of the biosensor for Hg²⁺ detection in river water samples was demonstrated with satisfactory results. These advantages endow the sensing strategy with a great potential for the simple, rapid, sensitive, and specific detection of Hg²⁺ from a wide range of real samples.