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The development of digital instruments for mental health monitoring using biosensor data from wearable devices can enable remote, longitudinal, and objective quantitative benchmarks. To survey developments and trends in this field, we conducted a systematic review of artificial intelligence (AI) models using data from wearable biosensors to predict mental health conditions and symptoms. Following PRISMA guidelines, we identified 48 studies using a variety of wearable and smartphone biosensors including heart rate, heart rate variability (HRV), electrodermal activity/galvanic skin response (EDA/GSR), and digital proxies for biosignals such as accelerometry, location, audio, and usage metadata. We observed several technical and methodological challenges across studies in this field, including lack of ecological validity, data heterogeneity, small sample sizes, and battery drainage issues. We outline several corresponding opportunities for advancement in the field of AI-driven biosensing for mental health.