MXene quantum dots (QDs), with their unique structural, optical, magnetic, and electronic characteristics, are promising contenders for various pharmaceutical and biomedical appliances including biological sensing/imaging, cancer diagnosis/therapy, regenerative medicine, tissue engineering, delivery of drugs/genes, and analytical biochemistry. Although functionalized MXene QDs have demonstrated high biocompatibility, superb optical properties, and stability, several challenging issues pertaining to their long-term toxicity, histopathology, biodistribution, biodegradability, and photoluminescence properties are still awaiting systematic study (especially the move towards the practical and clinical phases from the pre-clinical/lab-scale discoveries). The up-scalable and optimized synthesis methods need to be developed not only for the MXene QD-based nanosystems but also for other smart platforms and hybrid nanocomposites encompassing MXenes with vast clinical and biomedical potentials. Enhancing the functionalization strategies, improvement of synthesis methods, cytotoxicity/biosafety evaluations, enriching the biomedical applications, and exploring additional MXene QDs are crucial aspects for developing the smart MXene QD-based nanosystems with improved features. Herein, recent developments concerning the biomedical applications of MXene QDs are underscored with emphasis on current trends and future prospects.