Green synthesized cerium oxide nanoparticles (GS-CeO2 NPs) have a unique size, shape, and biofunctional properties and are decorated with potential biocompatible agents to perform various therapeutic actions, such as antimicrobial, anticancer, antidiabetic, and antioxidant effects and drug delivery, by acquiring various mechanistic approaches at the molecular level. In this review article, we provide a detailed overview of some of these critical mechanisms, including DNA fragmentation, disruption of the electron transport chain, degradation of chromosomal assemblage, mitochondrial damage, inhibition of ATP synthase activity, inhibition of enzyme catalytic sites, disorganization, disruption, and lipid peroxidation of the cell membrane, and inhibition of various cellular pathways. This review article also provides up-to-date information about the future applications of GS-CeONPs to make breakthroughs in medical sectors for the advancement and precision of medicine and to effectively inform the disease diagnosis and treatment strategies.