Conventional antibody-based targeted cancer therapy is one of the most promising avenues of successful cancer treatment, with the potential to reduce toxic side effects to healthy cells surrounding tumor cells. However, the full potential of antibodies is severely limited due to their large size, low stability, slow clearance, and high immunogenicity. Alternatively, recently discovered nanobodies, which are the smallest naturally occurring antigen-binding format, have shown great potential for addressing these limitations. Bioconjugation of nanobodies to functional groups such as toxins, enzymes, radionucleotides, and fluorophores can improve the efficacy and potency of nanobodies, enhance their in vivo pharmacokinetics, and expand the range of potential applications. Herein, we review the superior characteristics of nanobodies in comparison to conventional antibodies and provide insight into recent developments in nanobody conjugates for targeted cancer therapy and imaging.