Surface bio‐engineering of polymeric nanoparticles (PNPs) has emerged as a cornerstone in contemporary biomedical research, presenting a transformative avenue that can revolutionize diagnostics, therapies, and drug delivery systems. The approach involves integrating bioactive elements on the surfaces of PNPs, aiming to provide them with functionalities to enable precise, targeted, and favorable interactions with biological components within cellular environments. However, the full potential of surface bio‐engineered PNPs in biomedicine is hampered by obstacles, including precise control over surface modifications, stability in biological environments, and lasting targeted interactions with cells or tissues. Concerns like scalability, reproducibility, and long‐term safety also impede translation to clinical practice. In this review, these challenges in the context of recent breakthroughs in developing surface‐biofunctionalized PNPs for various applications, from biosensing and bioimaging to targeted delivery of therapeutics are discussed. Particular attention is given to bonding mechanisms that underlie the attachment of bioactive moieties to PNP surfaces. The stability and efficacy of surface‐bioengineered PNPs are critically reviewed in disease detection, diagnostics, and treatment, both in vitro and in vivo settings. Insights into existing challenges and limitations impeding progress are provided, and a forward‐looking discussion on the field's future is presented. The paper concludes with recommendations to accelerate the clinical translation of surface bio‐engineered PNPs.