Photo-based diagnosis and treatment methods are gaining prominence due to increased spatial imaging resolution, minimally invasive modalities involved as well as localized treatment. Recently, nanoparticles (NPs) have been developed and used in photo-based therapeutic applications. While some nanomaterials have inherent photo-based imaging capabilities, others including polymeric NPs act as nanocarriers to deliver various fluorescent dyes or photosensitizers for photoimaging and therapeutic applications. These applications can vary from Magnetic Resonance Imaging (MRI) and optical imaging to photothermal therapy (PTT) and chemotherapy. Materials commonly used for development of photo-based NPs ranges from metal-based (gold, silver and silica) to polymer-based (chitosan, dextran, poly ethylene glycol (PEG) and poly lactic-co-glycolic acid (PLGA)). Recent research has paved the way for multi-modal 'theranostic' (a combination of therapy and diagnosis) nano-carriers capable of active targeting using cell-specific ligands and carrying multiple therapeutic and imaging agents for accurate diagnosis and controlled drug delivery. This review summarizes the different materials used today to synthesize photo-based NPs, their diagnostic and therapeutic applications as well as the current challenges faced in bringing these novel nano-carriers into clinical practices.