Quantum dots (QDs), highly luminescent semiconductor nanocrystals, have found extensive applications in different fields, ranging from optoelectronic to bio-imaging. Numerous applications are emerging daily. Among these, ZnO QDs have higher biological significance because of their relative non-toxicity. The primary aim of this review is to overview the literature based on the biological applications of ZnO QDs, including gene therapy, drug delivery, optical imaging, allergen and antigen detection, cancer cell sensing, antibacterial agents and DNA detection. The luminescent properties of ZnO nanoparticles have attracted considerable attention for numerous applications like ultraviolet light emitting devices, flat panel displays, as low voltage phosphors and biosensing devices. The review throws light on the developments in fabrication techniques of nanometer-sized, water-dispersible, bio-compatible and stable ZnO QDs in aqueous medium for biological applications, including employing organic ligands, coating nanoparticles with inorganic shells, doping with a suitable element and capping nanoparticles surfaces with polymers. The low toxicity of ZnO and its high natural abundance make it a good alternative to cadmium based II-VI semiconductors, which cause toxicity via photoinduced reactive oxygen species (ROS) generation.