Photodynamic therapy is a clinical technique for the treatment of cancers, microbial infections and other medical conditions by means of light-induced generation of reactive oxygen species using photosensitising drugs. The intrinsic fluorescence of many such drugs make them potential theranostic agents for simultaneous diagnosis and therapy. This chapter reviews the basic chemical and biological aspects of photodynamic therapy with an emphasis on its applications in theranostics. The roles of nanotechnology is highlighted, as well as emerging trends such as photoimmunotherapy, image-guided surgery and light- and singlet-oxygen dosimetry.