Recent advancements in composite materials, including ceramics, metals, and polymers, have shown significant promise for biomedical applications. In particular, the use of carbon nanotubes (CNTs) as reinforcement in alumina and zirconia ceramics has garnered attention due to their potential to greatly enhance mechanical properties. CNTs, with their high aspect ratio, mechanical strength, and electrical conductivity, offer unique advantages for improving traditional ceramics used in biomedical applications, such as hip and knee replacements, where alumina and zirconia have been employed since the 1970s for their superior wear resistance and biocompatibility. This review critically examines the mechanical benefits of CNT-reinforced ceramics, focusing on factors such as CNT distribution, reinforcement mechanisms, fracture toughness, and long-term durability. Additionally, it explores the significant challenge of CNT toxicity, cytocompatibility, and potential long-term health risks, particularly their non-biodegradable and carcinogenic nature, which could limit their use in medical implants. While promising, inconsistencies in reported improvements, largely due to dispersion issues and ceramic-CNT interactions, along with unresolved toxicity concerns, indicate the need for further research. This review aims to provide a comprehensive understanding of both the mechanical potential and the biological risks of CNT-reinforced ceramics in biomedical applications.