Advances in chemistry and physics are providing an expanding array of nanostructured materials with unique and powerful optical properties. These nanomaterials provide a new set of tools that are available to biomedical engineers, biologists, and medical scientists who seek new tools as biosensors and probes of biological fluids, cells, and tissue chemistry and function. Nanomaterials are also being used to develop optically controlled devices for applications such as modulated drug delivery as well as optical therapeutics. This review discusses applications that have been successfully demonstrated using nanomaterials including semiconductor nanocrystals, gold nanoparticles, gold nanoshells, and silver plasmon resonant particles.