A forward sensing system for a vehicle includes a radar sensor and an image sensor housed in a self-contained unit disposed behind and attached at the vehicle windshield. A control includes an image processor that has an image processing chip that processes image data captured by the image sensor to detect an object of interest present exterior of the vehicle. The control, responsive at least in part to processing of captured image data and to sensing by the radar sensor, determines that a potentially hazardous condition exists in a path of forward travel of the vehicle. The radar sensor and the image sensor collaborate in a way that enhances sensing capability of the sensing system. Responsive to determination that the object of interest is in the path of forward travel of the vehicle, the control may at least in part control a driver assistance system of the vehicle.