Fluorescent silicon nanoparticles (SiNPs) attract considerable attention owing to their intrinsic advantages, including relatively strong fluorescence coupled with robust photostability, rich resource support and relatively low cost, industrial maturity, and good biocompatibility. Extensive efforts are devoted to developing effective methods for the synthesis of hydrogen or halogen-terminated SiNPs, which nevertheless need further surface modification to improve their stability and solubility for wide-ranging applications. Notably, recent years have witnessed the development of various aqueous synthetic strategies for direct preparation of highly fluorescent and photostable SiNPs in the aqueous phase, facilitating the promotion of this promising material for myriad optical applications. Here, a concise discussion of the latest exciting research progress of the preparation of SiNPs is given, with a focus on water-dispersible SiNPs synthesized in the aqueous phase. In addition, representative optical applications of SiNPs in bioimaging and sensing are also summarized. Finally, the opportunities and challenges of fluorescent-SiNP-based optical applications are discussed.