Endohedral metallofullerenes, a novel form of carbon-related nanomaterials, currently attract wide attention for their potential applications in biomedical fields such as therapeutic medicine. Most endohedral metallofullerenes are synthesized using C60 or higher molecular weight fullerenes because of the limited interior volume of fullerene. It is known that the encapsulated metal atom has strong electronic interactions with the carbon cage in metallofullerenes. Gd@C82 is one of the most important molecules in the metallofullerene family, known as Magnetic Resonance Imaging (MRI) contrast agent candidate for diagnostic imaging. Gadolinium endohedral metallofullerenol (e.g., Gd@C82(OH)22) is a functionalized fullerene with gadolinium trapped inside carbon cage. Our group previously demonstrated that the distinctive chemical and physical properties of Gd@C82(OH)22 are dependent on the number and position of the hydroxyl groups on the fullerene cage. The present article summarizes our latest findings of biomedical effects of Gd@C82(OH)22 and gives rise to a connected flow of the existing knowledge and information from experts in the field. It briefly narrates the synthesis and physico-chemical properties of Gd@C82(OH)22. The polyhydroxylated nanoparticles exhibit the enhanced water solubility and high purity, and were tested as a MRI contrast agent. Gd@C82(OH)22 treatment inhibited tumor growth in tumor-bearing nude mice. Although the precise mechanisms of this action are not well defined, our in vitro data suggest involvements of improved immunity and antioxidation by Gd@C82(OH)22 and its size-based selective targeting to tumor site. The review critically analyzed the relevant data instead of fact-listing, and explained the potential for developing Gd@C82(OH)22 into a diagnostic or therapeutic agent.