Diamond features an attractive combination of outstanding mechanical, optical, thermal and electrical properties; tunable surface characteristics; and unprecedented biocompatibility. Additionally, diamond can possess unique nitrogen-vacancy emission centers that are highly photostable and extremely sensitive to magnetic fields, temperatures, ion concentrations, and spin densities. With these inherent merits, diamond in various nanoscale configurations has demonstrated a variety of distinctive applications in a broad range of fields. In particular, research on diamond nanoparticles (0-dimensional structures) and arrays of diamond nanoneedles/nanowires (1-dimensional structures) has witnessed important and exciting progress in recent years. Here, we systematically review the superior properties of diamond nanomaterials and the nitrogen-vacancy centers they contain as well as their uses in biomedical applications, including biosensing, bioimaging and drug delivery. Moreover, systematic studies of the biocompatibility and toxicity of diamond nanostructures, which constitute an important issue for the biomedical applications of diamond that has not yet been thoroughly addressed in previous reviews, are also discussed. Finally, we present our insights into the key issues concerning these diamond nanomaterials and their future development for applications.