A review of recent advances in the development of luminescent inorganic nanoparticles doped with rare earth ions, which can be used for biomedical applications, is presented. Luminescent nanomaterials doped with rare earth ions are characterized by physicochemical properties such as long luminescence time, large Stokes and/or anti-Stokes shifts, narrow luminescence bands, high photostability, and low toxicity. These materials can be considered to be a new generation of biosensors along with conventional molecular probes such as organic dyes, quantum dots, and lanthanide labels based on organic chelates.