Graphene quantum dot (GQD) is a new type of carbon nanometer material. In addition to the excellent properties of graphene, it is superior due to the quantum limit effect and edge effect. Because of its advantages such as water solution, strong fluorescent, small size, and low biological toxicity, it has important application potential in various fields, especially in sensors and biomedical areas, which are mainly used as optical electrical sensors as well as in biological imaging and tumor therapy. In addition, GQDs have very important characteristics, such as optical and electrical properties. There are many preparation methods, divided into top-down and bottom-up methods, which have different advantages and disadvantages, respectively. In addition, the modification methods include heterogeneous doping, surface heterogeneity, etc. There are still many challenges in developing GQDs. For example, the synthesis steps are still hard to conduct, but as the inquiry continues to deepen, GQDs will be revolutionary materials in the future. In this work, the literature concerning research progress on GQDs has been reviewed and summarized, while the key challenges of their application have been pointed out, which may bring new insights to the application of GQDs.