This review tries to summarize the purpose of steadily developing surface-functionalized nanoparticles for various bio-applications and represents a fascinating and rapidly growing field of research. Due to their unique properties—such as novel optical, biodegradable, low-toxicity, biocompatibility, size, and highly catalytic features—these materials are considered superior, and it is thus vital to study these systems in a realistic and meaningful way. However, rapid aggregation, oxidation, and other problems are encountered with functionalized nanoparticles, inhibiting their subsequent utilization. Adequate surface modification of nanoparticles with organic and inorganic compounds results in improved physicochemical properties which can overcome these barriers. This review investigates and discusses the iron oxide nanoparticles, gold nanoparticles, platinum nanoparticles, silver nanoparticles, and silica-coated nanoparticles and how their unique properties after fabrication allow for their potential use in a wide range of bio-applications such as nano-based imaging, gene delivery, drug loading, and immunoassays. The different groups of nanoparticles and the advantages of surface functionalization and their applications are highlighted here. In recent years, surface-functionalized nanoparticles have become important materials for a broad range of bio-applications.