Upconversion nanoparticles (UCNPs) have become a versatile nanoplatform with promising potential in photothermal applications. By efficiently converting near-infrared (NIR) light into heat, UCNPs offer a non-invasive approach to induce hyperthermia in specific target tissues, such as cancer cells, while preserving surrounding healthy cells. The utilization of UCNPs in combination therapies, multifunctional nanosystems, and regenerative medicine applications highlights their versatility and adaptability in addressing complex healthcare challenges. By leveraging the multifunctionality of UCNPs, researchers can develop approaches for disease management, drug delivery, and monitoring, opening the path for more effective and tailored biomedical interventions. However, challenges such as NIR light penetration limitations, biocompatibility considerations, photothermal conversion efficiency optimization, tumor targeting strategies, and clinical translation studies need to be carefully considered and overcome to maximize the efficacy of UCNPs in photothermal applications. We aim to provide an inclusive exploration of the potential applications of UCNPs in photothermal therapy, highlighting their unique properties and versatility in targeted therapeutic interventions. This review explores the photothermal conversion efficiency, tumor-targeting strategies, and future prospects of UCNPs, aiming to highlight the challenges and opportunities in employing these nanoparticles for precise and effective applications in cancer therapy, tissue engineering, and personalized medicine.