Rapid progress in biological sensing and imaging technologies offers new and exciting opportunities to identify biochemical changes fundamental to preclinical research that may develop into the next generation of point‐of‐care devices. Small upconverting fluorescent nanoparticles (UCNPs) are a special class of lanthanide‐doped, optically active, microscopic particles that fluoresce upon near‐infrared light activation. With the additional advantages of deep penetration, minimal photodamage, and low background fluorescence in biological tissues, biosensors incorporating these lanthanide nanoparticles are rapidly emerging as serious contenders to rival the traditional downconversion‐based fluorescence nanoparticles. Emphasizing on two application areas, namely biosensing and bioimaging, the recent developments in lanthanide‐based UCNP design for optimum upconversion efficiency are reviewed. The article discusses the use of UCNPs in biosensing and bioimaging, highlights the challenges that hamper further applications, and concludes with future directions.