Carbon nanotubes (CNTs) have many unique properties such as high surface area, hollow cavities, and excellent mechanical and electrical properties. Interfacing carbon nanotubes with biological systems could lead to significant applications in various disease diagnoses. Significant progress in interfacing carbon nanotubes with biological materials has been made in key areas such as aqueous solubility, chemical and biological functionalization for biocompatibility and specificity, and electronic sensing of proteins. In addition, the bioconjugated nanotubes combine with the sensitive nanotube-based electronic devices would enable sensitive biosensors toward medical diagnostics. This paper reviews the current trends in biological functionalization of carbon nanotubes and its potential applications for breast cancer diagnostics. The paper also reports the applications of confocal microscopy for understanding the interactions of biological materials such as antibodies on carbon nanotubes that are specific to Her2 surface receptors in breast cancer cells. Further, a nanotube-field effect transistor is demonstrated for electronic sensing of antibodies that are specific to Her2 surface receptors in cancer cells.