Graphene and its composite materials are very important in many disciplines of science and have been used enormously by researchers since their discovery in 2004. These are a new group of compounds, and are also wonderful model systems for quantum behavior studies. Their properties like exceptional conductivity, biocompatibility, surface area, mechanical strength, and thermal properties make them rising stars in the scientific community. Graphene and its composite compounds are utilized widely in different medical applications, for example, biosensing of biological compounds responsible for disease development, bioimaging of various cells, tissues, microorganisms, animal models, etc. In addition, they are used for enhancing and supporting the stem cell differentiation, i.e., regenerative medicine for regeneration studies of various human organs, tissue engineering in biology for the development of carrier materials, as well as in bone reformation. This review focuses on the modification procedure involved in the fabrication of graphene‐based biomaterials for various applications and recent developments in research related to graphene and graphene‐based materials in biosensing, optical sensing, gas sensing, drug, gene, protein delivery, tissue engineering, and bioimaging. In addition, the potential toxicological effects of graphene‐based biomaterials are discussed.