Nanobodies are derived from the vari-able domain of the heavy-chain antibodies (HCAbs) that occur naturally in the serum of Camelidae. They are the smallest antibody fragments capable to bind antigens. With the characteristics of their increased solubility, increased domain stabilities, nanomolar affinities, easy crossing the blood-brain barrier, easy generation, engineering, optimization and tailoring, easy humanization, nanobodies have extensive application prospects in diagnosis and detection. Although nanobody has demonstrated tremendous success, a number of practical challenges limit its broader applications in disease diagnosis and detection, including construction of a phage library and selection of nanobody fragments with high affinity and immunogold labeling technique. Here, we review several recent findings on the use of nanobodies in molecular diagnostics and suggest some practical strategies in resolving the current challenges in this attractive research area, particularly to optimize the affinity, solubility, humanization of nanobodies.