Theranostic nanoparticles' potential in tumor treatment has been widely acknowledged thanks to their capability of integrating multifaceted functionalities into a single nanosystem. Theranostic nanoparticles are typically equipped with an inorganic core with exploitable physical properties for imaging and therapeutic functions, bioinert coatings for improved biocompatibility and immunological stealth, controlled drug-loading-release modules, and the ability to recognize specific cell type for uptake. Integrating multiple functionalities in a single nanosized construct require sophisticated molecular design and precise execution of assembly procedures. Underlying the multifunctionality of theranostic nanoparticles, ligand chemistry plays a decisive role in translating theoretical designs into fully functionalized theranostic nanoparticles. The ligand hierarchy in theranostic nanoparticles is usually threefold. As they serve to passivate the nanoparticle's surface, capping ligands form the first layer directly interfacing with the crystalline lattice of the inorganic core. The size and shape of nanoparticles are largely determined by the molecular property of capping ligands so that they have profound influences on the nanoparticles' surface chemistry and physical properties. Capping ligands are mostly chemically inert, which necessitates the presence of additional ligands for drug loading and tumor targeting. The second layer is commonly utilized for drug loading. Therapeutic drugs can either be covalently conjugated onto the capping layer or noncovalently loaded onto nanoparticles via drug-loading ligands. Drug-loading ligands need to be equally versatile in properties to accommodate the diversity of drugs. Biodegradable moieties are often incorporated into drug-loading ligands to enable smart drug release. With the aid of targeting ligands which usually stand the tallest on the nanoparticle surface to seek and bind to their corresponding receptors on the target, theranostic nanoparticles can preferentially accumulate at the tumor site to attain a higher precision and quantity for drug delivery. In this Account, the properties and utilities of representative capping ligands, drug-loading ligands, and targeting ligands are reviewed. Since these types of ligands are often assembled in close vicinity to each other, it is essential for them to be chemically compatible and able to function in tandem with each other. Relevant conjugation strategies and critical factors with a significant impact on ligands' performance on nanoparticles are discussed. Representative theranostic nanoparticles are presented to showcase how different types of ligands function synergistically from a single nanosystem. Finally, the technological outlook of evolving ligand chemistry on theranostic nanoparticles is provided.