The use of luminescent colloidal quantum dots in biological investigations has increased dramatically over the past several years due to their unique size-dependent optical properties and recent advances in biofunctionalization. In this review, we describe the methods for generating high-quality nanocrystals and report on current and potential uses of these versatile materials. Numerous examples are provided in several key areas including cell labeling, biosensing, in vivo imaging, bimodal magnetic-luminescent imaging, and diagnostics. We also explore toxicity issues surrounding these materials and speculate about the future uses of quantum dots in a clinical setting.