Carbon quantum dots (CQDs) represent a rapidly emerging class of nanomaterials with significant potential in biomedical applications due to their tunable fluorescence, high biocompatibility, and versatile functionalization. This review focuses on the recent progress in utilizing CQDs for drug delivery, bioimaging, biosensing, and cancer therapy. With their unique optical properties, such as tunable fluorescence, high quantum yield, and photostability, CQDs enable precise bioimaging and sensitive biosensing. Their small size, biocompatibility, and ease of surface functionalization allow for the development of targeted drug delivery systems, enhancing therapeutic precision and minimizing side effects. In cancer therapy, CQDs have shown potential in photodynamic and photothermal treatments by generating reactive oxygen species under light exposure, selectively targeting cancer cells while sparing healthy tissues. Furthermore, CQDs’ ability to penetrate biological barriers including the blood–brain barrier opens new possibilities for delivering therapeutic agents to hard‐to‐reach areas, such as tumors or diseased tissues. However, challenges such as optimizing synthesis, ensuring long‐term stability, and addressing safety concerns in biological environments remain critical hurdles. This review discusses current efforts to overcome these barriers and improve CQD performance in clinical settings, including scalable production methods and enhanced biocompatibility. As research progresses, CQDs are expected to play an important role in improving healthcare by offering more targeted treatment options and contributing to advancements in personalized medicine.