Living therapeutic and diagnostic materials based on engineered microorganisms are emerging as a novel approach with the perspective of providing patient-tailored, sustainable, and cost-effective healthcare solutions. In this review, we focus on recent advances in using genetically or chemically engineered microorganisms as living diagnostics, therapeutics, and as a means of prevention for various diseases. We also highlight the applications of living therapeutics for acute and chronic diseases, and the role of micro/macro-encapsulation of the engineered microorganisms. We further showcase the current success of engineered living therapeutics in clinical trials and discuss challenges and future trends in the field.