Carbon dots (CDs) are a new type of carbon nanomaterial that have unique physical and chemical properties, good biocompatibility, low toxicity, and easy surface functionalization, making them widely used in biological imaging, environmental monitoring, chemical analysis, targeted drug delivery, disease diagnosis, therapy, etc. In this review, our content is mainly divided into four parts. In the first part, we focused on the preparation methods of CDs, including arc discharge, laser ablation, electrochemical oxidation, chemical oxidation, combustion, hydrothermal/solvent thermal, microwave, template, method etc. Next, we summarized methods of CD modification, including heteroatom doping and surface functionalization. Then, we discussed the optical properties of CDs (ultraviolet absorption, photoluminescence, up-conversion fluorescence, etc.). Lastly, we reviewed the common applications of CDs in biomedicine from the aspects of in vivo and in vitro imaging, sensors, drug delivery, cancer theranostics, etc. Furthermore, we also discussed the existing problems and the future development direction of CDs.