Upconversion is a multiphoton process that converts NIR light to higher energy light such as UV, visible, or even NIR (with a wavelength shorter than the excitation source). The review first presents lanthanide-doped upconverting nanoparticles with a focus on the mechanisms of upconversion and the various synthetic approaches for their preparation, including the choice of the host material and of the lanthanide dopant ions. It then describes the different strategies to achieve surface modifications for rendering the nanoparticles hydrophilic and for bioconjugating them as required for targeting specific biological markers. The sections are devoted to applications in bioanalysis, medical imaging, and drug release. Lanthanide-doped upconverting nanoparticles have indeed found widespread use for the sensing of cell temperature and as optical probes for metal ions analysis as well as in immunoassays. More recently, they have been part of the strategy for developing cell and small organism/animal imaging, including multimodal bioimaging. Finally, beacons based on upconverting nanoparticles have been constructed with the aim of inducing in situ drug release or energy transfer for triggering the formation of singlet oxygen. This is of interest in photodynamic and photothermal therapy of cancer. The last section provides the reader with the challenges that the community faces in order to turn lanthanide-doped upconverting nanomaterials into versatile platforms for the generation of nanotheranostic tools for the needs of nanomedicine.