Nanotechnology has gained significant interest from biomedical and analytical researchers in recent years. Carbon dots (C-dots), a new member of the carbon nanomaterial family, are spherical, nontoxic, biocompatible, and discrete particles less than 10 nm in diameter. Research interest has focused on C-dots because of their ultra-compact nanosize, favorable biocompatibility, outstanding photoluminescence, superior electron transfer ability, and versatile surface engineering properties. C-dots show significant potential for use in cellular imaging, biosensing, targeted drug delivery, and other biomedical applications. Here we discuss C-dots, in terms of their physicochemical properties, fabrication techniques, toxicity issues, surface engineering and biomedical potential in drug delivery, targeting as well as bioimaging.