Fluorescent nanodiamonds (FNDs) are a new class of carbon nanomaterials that offer great promise for biological applications such as cell labeling, imaging, and sensing due to their exceptional optical properties and biocompatibility. Implementation of these applications requires reliable and precise surface functionalization. Although diamonds are generally considered inert, they typically possess diverse surface groups that permit a range of different functionalization strategies. This review provides an overview of nanodiamond surface functionalization methods including homogeneous surface termination approaches (hydrogenation, halogenation, amination, oxidation, and reduction), in addition to covalent and non-covalent surface modification with different functional moieties. Furthermore, the subsequent coupling of biomolecules onto functionalized nanodiamonds is reviewed. Finally, biomedical applications of nanodiamonds are discussed in the context of functionalization.