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Delivery of imaging reagents and drugs to tumors is essential for cancer diagnosis and therapy. In addition to therapeutic and diagnostic functionalities, peptides have potential benefits such as biocompatibility, ease to synthesize, smaller size, by-passing off-target side effects, and achieving the beneficial effects with lower-administered dosages. A particular type of peptide known as cell penetrating peptides (CPP) have been predominantly studied during last twenty years as they are not only capable to translocate themselves across membranes but also allow carrier drugs to translocate across plasma membrane, by different mechanisms depending on the CPP. This is of great potential importance in drug delivery systems, as the ability to pass across membranes is crucial to many drug delivery systems. In spite of significant progress in design and application of CPP, more investigations are required to further improve their delivery to tumors, with reduced side-effect and enhanced therapeutic efficacy. In this review, we emphasis on current advancements in preclinical and clinical trials based on using CPP for more efficient delivery of anti-cancer drugs and imaging reagents to cancer tissues and individual cells associated with them. We discuss the evolution of the CPPs-based strategies for targeted delivery, their current status and strengths, along with summarizing the role of CPPs in targeted drug delivery. We also discuss some recently reported diagnostic applications of engineered protease-responsive substrates and activable imaging complexes. We highlight the recent clinical trial data by providing a road map for better design of the CPPs for future preclinical and clinical applications.