Fluorescent nanodiamonds (FNDs) are a new class of carbon nanomaterials that offer great promise for biomedical imaging applications due to their superior optical stability. FNDs are widely used in biomedical application such as cell labeling, imaging, and sensing. However, they tend to precipitate in physiological buffers, and their surface modification can be difficult due in part to the inertness of diamond. Here, we demonstrate polydopamine (PDA) encapsulation of FNDs, which is inspired by the adhesion mechanism of marine mussels. The PDA shells are readily modified via Michael addition or Schiff base reactions with molecules presenting thiol or nitrogen derivatives. We describe modification of PDA shells by thiol terminated polyethylene glycol (PEG) molecules that enhance colloidal stability in biological solutions and biocompatibility of PDA coated FND (FND@PDA). The PEGylated FND@PDA nanoparticles were utilized as fluorescent probes for cell imaging with immature bone marrow derived dendritic cells. The FND@PDA nanoparticles were taken up by the cells, while exhibiting reduced nonspecific membrane adhesion. Moreover, biotin-PEG-SH functionalized FND@PDA was conjugated with biotinylated DNA via streptavidin, permitting long-term single-molecule fluorescence based tracking. The robust polydopamine encapsulation strategy that we present provides an avenue for the development of FND as multifunctional labels, drug delivery vehicles, and targeting agents for biomedical applications.