The last decade witnessed the emergence of a new family of 2D transition metal carbides and nitrides named MXenes, which quickly gained momentum due to their exceptional electrical, mechanical, optical, and tunable functionalities. These outstanding properties also rendered them attractive materials for biomedical and biosensing applications, including drug delivery systems, antimicrobial applications, tissue engineering, sensor probes, auxiliary agents for photothermal therapy and hyperthermia applications, etc. The hydrophilic nature of MXenes with rich surface functional groups is advantageous for biomedical applications over hydrophobic nanoparticles that may require complicated surface modifications. As an emerging 2D material with numerous phases and endless possible combinations with other 2D materials, 1D materials, nanoparticles, macromolecules, polymers, etc., MXenes opened a vast terra incognita for diverse biomedical applications. Recently, MXene research picked up the pace and resulted in a flood of literature reports with significant advancements in the biomedical field. In this context, this review will discuss the recent advancements, design principles, and working mechanisms of some interesting MXene-based biomedical applications. It also includes major progress, as well as key challenges of various types of MXenes and functional MXenes in conjugation with drug molecules, metallic nanoparticles, polymeric substrates, and other macromolecules. Finally, the future possibilities and challenges of this magnificent material are discussed in detail.