Bacteriophages, also known as phages, are specific antagonists against bacteria. T7 phage has drawn massive attention in precision medicine owing to its distinctive advantages, such as short replication cycle, ease in displaying peptides and proteins, high stability and cloning efficiency, facile manipulation, and convenient storage. By introducing foreign gene into phage DNA, T7 phage can present foreign peptides or proteins site-specifically on its capsid, enabling it to become a nanoparticle that can be genetically engineered to screen and display a peptide or protein capable of recognizing a specific target with high affinity. This review critically introduces the biomedical use of T7 phage, ranging from the detection of serological biomarkers and bacterial pathogens, recognition of cells or tissues with high affinity, design of gene vectors or vaccines, to targeted therapy of different challenging diseases (e.g., bacterial infection, cancer, neurodegenerative disease, inflammatory disease, and foot-mouth disease). It also discusses perspectives and challenges in exploring T7 phage, including the understanding of its interactions with human body, assembly into scaffolds for tissue regeneration, integration with genome editing, and theranostic use in clinics. As a genetically modifiable biological nanoparticle, T7 phage holds promise as biomedical imaging probes, therapeutic agents, drug and gene carriers, and detection tools.