A thorough investigation to evaluate the biological application of quantum dots was performed. Quantum dots are novel semiconductor nanocrystals that are highly tunable in their spectral properties and exhibit strong photoluminescence and high photostability. They have been shown to be a promising optical contrast agent for biological applications, however further biological studies are needed to evaluate and characterize their applicability. In this thesis, we examined the various applications of quantum dots and leverage its optical properties for cancer imaging. First, we evaluated the effects of different nanoparticle surface coatings on the cellular uptake of quantum dots to understand quantum dot delivery into cells. Building on our knowledge of surface coating influences, we then evaluated the cytotoxicity of quantum dots, reporting new insight on the intracellular evaluation of quantum dot cytotoxicity. Next, we demonstrated the specificity of bioconjugated quantum dots in molecular targeting and imaging of cancer cell markers. Finally, we engineered a novel nanoparticle construct, an activatable quantum probe that activates in the presence of proteolytic activity as a potential method for early cancer detection based on increased metalloproteinase activity in the stroma of cancer tissue. Furthermore, we expanded our focus on developing 'smart' functional nanoprobes by developing a novel siRNA-based molecular beacon useful for gene target validation and silencing as a promising tool for dual imaging and therapy in cancer.