Immune clearance and insufficient targeting have limited the efficacy of existing therapeutic strategies for cancer. Toxic side effects and individual differences in response to treatment have further limited the benefits of clinical treatment for patients. Biomimetic cancer cell membrane-based nanotechnology has provided a new approach for biomedicine to overcome these obstacles. Biomimetic nanoparticles exhibit various effects (e.g., homotypic targeting, prolonging drug circulation, regulating the immune system, and penetrating biological barriers) after encapsulation by cancer cell membranes. The sensitivity and specificity of diagnostic methods will also be improved by utilizing the properties of cancer cell membranes. In this review, different properties and functions of cancer cell membranes are presented. Utilizing these advantages, nanoparticles can exhibit unique therapeutic capabilities in various types of diseases, such as solid tumors, hematological malignancies, immune system diseases, and cardiovascular diseases. Furthermore, cancer cell membrane-encapsulated nanoparticles show improved effectiveness and efficiency in combination with current diagnostic and therapeutic methods, which will contribute to the development of individualized treatments. This strategy has promising clinical translation prospects, and the associated challenges are discussed.