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Phycobiliproteins (PBPs), captivating water-soluble proteins found in cyanobacteria, red algae, and cryptophytes, continue to fascinate researchers and industries due to their unique properties and multifaceted applications. These proteins consist of chromophores called phycobilins (PBs), covalently linked to specific protein subunits. Major phycobiliproteins include phycocyanin (PC), allophycocyanin (APC), and phycoerythrin (PE), each distinguished by distinct absorption and emission spectra. Beyond their colorful properties, PBs exhibit a broad spectrum of biological activities, including antibacterial, antifungal, antiviral, and antidiabetic effects, making them valuable for pharmaceutical, biotechnological, and medical purposes. The extraction and purification methods for PBs have been optimized to enhance their bioavailability and stability, opening new avenues for industrial production. For this review, a comprehensive literature search was conducted using scientific databases such as PubMed, Scopus, and Web of Science, prioritizing peer-reviewed articles published between 2000 and 2025, with an emphasis on recent advances from the last five years, using keywords such as “phycobiliproteins”, “phycobilins”, “bioactivities”, “therapeutic applications”, and “industrial use”. Studies were selected based on their relevance to the biological, technological, and pharmacological applications of PBPs and PBs. This review explores the diverse applications of PBs in therapeutic, diagnostic, and environmental fields, highlighting their potential as natural alternatives in the treatment of various diseases. The future perspectives for PBs focus on their incorporation into innovative drug delivery systems, biocompatible materials, and functional foods, presenting exciting opportunities for advancing human health and well-being.