Droplet-based microfluidic systems have been shown to be compatible with many chemical and biological reagents and capable of performing a variety of “digital fluidic” operations that can be rendered programmable and reconfigurable. This platform has dimensional scaling benefits that have enabled controlled and rapid mixing of fluids in the droplet reactors, resulting in decreased reaction times. This, coupled with the precise generation and repeatability of droplet operations, has made the droplet-based microfluidic system a potent high throughput platform for biomedical research and applications. In addition to being used as microreactors ranging from the nano- to femtoliter range; droplet-based systems have also been used to directly synthesize particles and encapsulate many biological entities for biomedicine and biotechnology applications. This review will focus on the various droplet operations, as well as the numerous applications of the system. Due to advantages unique to droplet-based systems, this technology has the potential to provide novel solutions to today's biomedical engineering challenges for advanced diagnostics and therapeutics.