The design, application, and translation of targeted multimodality molecular imaging probes based on nanotechnology have attracted increasing attentions during the last decade and will continue to play vital roles in cancer diagnosis and personalized medicine. With the growing awareness of drawbacks of traditional organic dyes and quantum dots, biocompatible lanthanide ion doped upconversion nanoparticles have emerged as promising candidates for clinically translatable imaging probes, owing to their unique features that are suitable for future targeted multimodal imaging in living subjects. In this review, we summarized the recent advances in the field of functionalized upconversion nanoparticles (f-UCNP) for biological imaging and therapy in vivo, and discussed the future research directions, obstacles ahead, and the potential use of f-UCNP in translational research.