Upconversion nanoparticles (UCNPs) represent a new class of fluorophores. Both the excitation and (anti-Stokes) emission wavelengths are in the long wave part of the spectrum so that their luminescence can deeply penetrate tissues and cause low photodamage in biological samples. Their large anti-Stokes shifts, sharp emission bands, zero auto-fluorescence from biological samples and high photostability renders them an ideal kind of fluorescent labels for a variety of analytical formats, for bioimaging in cancer therapy. This review covers the basic mechanisms of up-conversion luminescence, the methods for the synthesis and surface modification of biocompatible UCNPs, and aspects of the in vivo delivery of UCNPs. More specifically, we discuss (a) recent progress regarding UCNPs for multimodal targeted tumor imaging, (b) UCNP-based methods of biological detection and sensing, (c) the use of UCNPs in drug delivery, (d) applications in photodynamic therapy, photothermal therapy and radiotherapy. Finally, we are addressing challenges and opportunities of this quickly emerging field. Contains 362 references.