Carbon-based nanomaterials have attracted great interest in biomedical applications such as advanced imaging, tissue regeneration, and drug or gene delivery. The toxicity of the carbon nanotubes and graphene remains a debated issue although many toxicological studies have been reported in the scientific community. In this review, we summarize the biological effects of carbon nanotubes and graphene in terms of in vitro and in vivo toxicity, genotoxicity and toxicokinetics. The dose, shape, surface chemistry, exposure route and purity play important roles in the metabolism of carbon-based nanomaterials resulting in differential toxicity. Careful examination of the physico-chemical properties of carbon-based nanomaterials is considered a basic approach to correlate the toxicological response with the unique properties of the carbon nanomaterials. The reactive oxygen species-mediated toxic mechanism of carbon nanotubes has been extensively discussed and strategies, such as surface modification, have been proposed to reduce the toxicity of these materials. Carbon-based nanomaterials used in photothermal therapy, drug delivery and tissue regeneration are also discussed in this review. The toxicokinetics, toxicity and efficacy of carbon-based nanotubes and graphene still need to be investigated further to pave a way for biomedical applications and a better understanding of their potential applications to humans.