Functionalization enhances the properties and characteristics of nanoparticles through surface modification, and enables them to play a major role in the field of medicine. In molecular imaging, quality functional images are required with proper differentiation which can be seen with high contrast to obtain viable information. This review article discusses how functionalization enhances molecular imaging and enables multimodal imaging by which images with combination of functions particular to each modality can be obtained. This also explains how nanoparticles interacting at molecular level, when functionalized with molecules can target the cells of interest or substances with high specificity, reducing background signal and allowing simultaneous therapies to be carried out while imaging. Functionalization allows imaging for a prolonged period and enables to track the cells over a period of time. Recent researches and progress in functionalizing the nanoparticles to specifically enhance bioimaging with different modalities and their applications are reviewed in this article.