Confocal Raman microscopy is a powerful technique for identifying materials and molecular species; however, the signal from Raman scattering is extremely weak. Typically, handheld Raman instruments are cost-effective but less sensitive, while high-end scientific-grade Raman instruments are highly sensitive but extremely expensive. This limits the widespread use of Raman technique in our daily life. To bridge this gap, we explored and developed a cost-effective yet highly sensitive confocal Raman microscopy system. The key components of the system include an excitation laser based on readily available laser diode, a lens-grating-lens type spectrometer with high throughput and image quality, and a sensitive detector based on a linear charge-coupled device (CCD) that can be cooled down to -30 °C. The developed compact Raman instrument can provide high-quality Raman spectra with good spectral resolution. The 3rd order 1450 cm -1 peak of Si (111) wafer shows a signal-to-noise ratio (SNR) better than 10:1, demonstrating high sensitivity comparable to high-end scientific-grade Raman instruments. We also tested a wide range of different samples (organic molecules, minerals and polymers) to demonstrate its universal application capability.