Although medical advances have increased our grasp of the amazing morphological, genetic, and phenotypic diversity of diseases, there are still significant technological barriers to understanding their complex and dynamic character. Specifically, the complexities of the biological systems throw a diverse set of challenges in developing efficient theranostic tools and methodologies that can probe and treat pathologies. Among several emerging theranostic techniques such as photodynamic therapy, photothermal therapy, magnetic resonance imaging, and computed tomography, Raman spectroscopy (RS) is emerging as a promising tool that is a label-free, cost-effective, and non-destructive technique. It can also provide real-time diagnostic information and can employ multimodal probes for detection and therapy. These attributes make it a perfect candidate for the analytical counterpart of the existing theranostic probes. The use of biocompatible nanomaterials for the fabrication of Raman probes provides rich structural information about the biological molecules, cells, and tissues and highly sensitive information down to single-molecule levels when integrated with advanced RS tools. This review discusses the fundamentals of Raman spectroscopic tools such as surface-enhanced Raman spectroscopy and Resonance Raman spectroscopy, their variants, and the associated theranostic applications. Besides the advantages, the current limitations, and future challenges of using RS in disease diagnosis and therapy have also been discussed.