Peptide-based molecular beacons are Förster resonance energy transfer-based target-activatable probes. They offer control of fluorescence emission in response to specific cancer targets and thus are useful tools for in vivo cancer imaging. With our increasing knowledge about human genome in health and disease, peptide-based "smart" probes are continually developed for in vivo optical imaging of specific molecular targets, biological pathways and cancer progression and diagnosis. A class of fluorescent photosensitizers further extends the application of peptide beacons to cancer therapeutics. This review highlights the applications of peptide beacons in cancer imaging, the simultaneous treatment and response monitoring and smart therapeutics with a focus on recent improvements in the design of these probes.