The camelid-derived single chain antibody (sdAb), also termed VHH or nanobody, is a unique, functional heavy (H)-chain antibody (HCAb). In contrast to conventional antibodies, sdAb is a unique antibody fragment consisting of a heavy-chain variable domain. It lacks light chains and a first constant domain (CH1). With a small molecular weight of only 12~15 kDa, sdAb has a similar antigen-binding affinity to conventional Abs but a higher solubility, which exerts unique advantages for the recognition and binding of functional, versatile, target-specific antigen fragments. In recent decades, with their unique structural and functional features, nanobodies have been considered promising agents and alternatives to traditional monoclonal antibodies. As a new generation of nano-biological tools, natural and synthetic nanobodies have been used in many fields of biomedicine, including biomolecular materials, biological research, medical diagnosis and immune therapies. This article briefly overviews the biomolecular structure, biochemical properties, immune acquisition and phage library construction of nanobodies and comprehensively reviews their applications in medical research. It is expected that this review will provide a reference for the further exploration and unveiling of nanobody properties and function, as well as a bright future for the development of drugs and therapeutic methods based on nanobodies.