Upconversion nanoparticles (UCNPs) show attractive anti-Stokes characteristics converting lower-energy photons into higher-energy emissions. The excellent biocompatibility and colloidal dispersibility, especially easy surface functionalization provide significant advantages over traditional luminescent probes. UCNPs were dynamically pursued in the fields of biosensing, disease treatment, and bioimaging. As a result, the interaction between nanomaterials and physiological tissues has fueled treat interests to understand the immunotoxicity and genotoxicity behaviors of UCNPs. This review will summarize the nanotoxicology and biotoxicity of functionalized UCNPs, and describe the methods for assessing toxicity at the cellular and genetic levels.