Upconverting nanoparticles (UCNPs) possess great potential for biomedical application. UCNPs absorb and convert near-infrared (NIR) radiation in the biological imaging window to visible (Vis) and even ultraviolet (UV) radiation. NIR excitation offers reduced scattering and diminished autofluorescence in biological samples, whereas the emitted UV-Vis and NIR photons can be used for cancer treatment and imaging, respectively. However, UCNPs are usually synthesized in organic solvents and are not readily suitable for biomedical application due to the hydrophobic nature of their surface. Herein, we have removed the hydrophobic ligands from the synthesized UCNPs and coated the bare UCNPs with two custom-made hydrophilic polyelectrolytes (synthesized via the reversible addition-fragmentation chain transfer (RAFT) polymerization method). Polymers containing different amounts of PEGylated and carboxylic groups were studied. Coating with both polymers increased the upconversion (UC) emission intensity and photoluminescence lifetime values of the UCNPs, which directly translates to more efficient cancer cell labeling nanoprobes. The polymer composition plays a crucial role in the modification of UCNPs, not only with respect to their colloidal stability, but also with respect to the cellular uptake. Colloidally unstable bare UCNPs aggregate in cell culture media and precipitate, rendering themselves unsuitable for any biomedical use. However, stabilization with polymers prevents UCNPs from aggregation, increases their uptake in cells, and improves the quality of cellular labeling. This investigation sheds light on the appropriate coating for UCNPs and provides relevant insights for the rational development of imaging and therapeutic tools.