An emerging class of inorganic optical reporters are near-infrared (NIR) excitable lanthanide-based upconversion nanoparticles (UCNPs) with multicolor emission and long luminescence lifetimes in the range of several hundred microseconds. For the design of chemical sensors and optical probes that reveal analyte-specific changes in their spectroscopic properties, these nanomaterials must be combined with sensitive indicator dyes that change their absorption and/or fluorescence properties selectively upon interaction with their target analyte, utilizing either resonance energy transfer (RET) processes or reabsorption-related inner filter effects. The rational development of UCNP-based nanoprobes for chemical sensing and imaging in a biological environment requires reliable methods for the surface functionalization of UCNPs, the analysis and quantification of surface groups, a high colloidal stability of UCNPs in aqueous media as well as the chemically stable attachment of the indicator molecules, and suitable instrumentation for the spectroscopic characterization of the energy-transfer systems and the derived nanosensors. These topics are highlighted in the following feature article, and examples of functionalized core-shell nanoprobes for the sensing of different biologically relevant analytes in aqueous environments will be presented. Special emphasis is placed on the intracellular sensing of pH.