Carbon nanodots (CNDs) are an emerging class of nanomaterials and have generated much interest in the field of biomedicine by way of unique properties, such as superior biocompatibility, stability, excellent photoluminescence, simple green synthesis, and easy surface modification. CNDs have been featured in a host of applications, including bioimaging, biosensing, and therapy. In this review, we summarize the latest research progress of CNDs and discuss key advances in our comprehension of CNDs and their potential as biomedical tools. We highlighted the recent developments in the understanding of the functional tailoring of CNDs by modifying dopants and surface molecules, which have yielded a deeper understanding of their antioxidant behavior and mechanisms of action. The increasing amount of in vitro research regarding CNDs has also spawned interest in in vivo practices. Chief among them, we discuss the emergence of research analyzing CNDs as useful therapeutic agents in various disease states. Each subject is debated with reflection on future studies that may further our grasp of CNDs.