Terahertz (THz) technology has experienced rapid development in the past two decades. Growing numbers of interdisciplinary applications are emerging, including materials science, physics, communications, and security as well as biomedicine. THz biophotonics involves studies applying THz photonic technology in biomedicine, which has attracted attention due to the unique features of THz waves, such as the high sensitivity to water, resonance with biomolecules, favorable spatial resolution, capacity to probe the water–biomolecule interactions, and nonionizing photon energy. Despite the great potential, THz biophotonics is still at an early stage of development. There is a lack of standards for instrumentation, measurement protocols, and data analysis, which makes it difficult to make comparisons among all the work published. In this article, we give a comprehensive review of the key findings that have underpinned research into biomedical applications of THz technology. In particular, we will focus on the advances made in general THz instrumentation and specific THz-based instruments for biomedical applications. We will also discuss the theories describing the interaction between THz light and biomedical samples. We aim to provide an overview of both basic biomedical research as well as pre-clinical and clinical applications under investigation. The paper aims to provide a clear picture of the achievements, challenges, and future perspectives of THz biophotonics.