Targeted drug delivery has been transformed by photoluminescent emitters, enabling combined therapeutic and diagnostic (theranostic) applications. These systems use materials like quantum dots, carbon dots, and rare-earth nanoparticles to achieve precise targeting, reduced side effects, and real-time imaging. Passive and active mechanisms guide the drug to specific sites, minimizing off-target effects. Innovations in materials that respond to stimuli, like those affected by pH or redox changes, allow controlled drug release in environments like tumor microenvironments. Advanced encapsulation improves drug stability, loading capacity, and responsiveness to triggers. Light-triggered delivery systems use near-infrared or visible light for precise, non-invasive drug activation, while photodynamic therapy integrates treatment and imaging for better cancer care. Biocompatible and biodegradable materials are prioritized to ensure safety and minimize toxicity. Surface modifications, such as PEGylation and ligand attachment, enhance targeting accuracy and extend circulation time. Stability issues, including sensitivity to the environment and limited shelf life, are addressed through improved encapsulation techniques. Pharmacokinetic and pharmacodynamic studies optimize drug distribution, circulation, and toxicity reduction. Photoluminescent systems enable real-time monitoring, dose adjustments, and tracking therapeutic progress. Despite challenges in scalability, cost, and regulatory approvals, these systems represent a breakthrough in personalized medicine, combining precision, diagnostics, and treatment.