Carbon-based nanomaterials including single- and multi-walled carbon nanotubes, graphene oxide, fullerenes and nanodiamonds are potential candidates for various applications in medicine such as drug delivery and imaging. However, the successful translation of nanomaterials for biomedical applications is predicated on a detailed understanding of the biological interactions of these materials. Indeed, the potential impact of the so-called bio-corona of proteins, lipids, and other biomolecules on the fate of nanomaterials in the body should not be ignored. Enzymatic degradation of carbon-based nanomaterials by immune-competent cells serves as a special case of bio-corona interactions with important implications for the medical use of such nanomaterials. In the present review, we highlight emerging biomedical applications of carbon-based nanomaterials. We discuss recent studies on nanomaterial ‘coronation’ and how this impacts on biodistribution and targeting along with studies on the enzymatic degradation of carbon-based nanomaterials, and the role of surface modification of nanomaterials for these biological interactions.