This systematic review classifies smartwatch-based healthcare applications in the literature according to their application and summarizes what has led to feasible systems. To this end, we conducted a systematic review of peer-reviewed smartwatch studies related to healthcare by searching PubMed, EBSCOHost, Springer, Elsevier, Pro-Quest, IEEE Xplore, and ACM Digital Library databases to find articles between 1998 and 2016. Inclusion criteria were: (1) a smartwatch was used, (2) the study was related to a healthcare application, (3) the study was a randomized controlled trial or pilot study, and (4) the study included human participant testing. Each article was evaluated in terms of its application, population type, setting, study size, study type, and features relevant to the smartwatch technology. After screening 1,119 articles, 27 articles were chosen that were directly related to healthcare. Classified applications included activity monitoring, chronic disease self-management, nursing or home-based care, and healthcare education. All studies were considered feasibility or usability studies, and had limited sample sizes. No randomized clinical trials were found. Also, most studies utilized Android-based smartwatches over Tizen, custom-built, or iOS- based smartwatches, and many relied on the use of the accelerometer and inertial sensors to elucidate physical activities. The results show that most research on smartwatches has been conducted only as feasibility studies for chronic disease self-management. Specifically, these applications targeted various disease conditions whose symptoms can easily be measured by inertial sensors, such as seizures or gait disturbances. In conclusion, although smartwatches show promise in healthcare, significant research on much larger populations is necessary to determine their acceptability and effectiveness in these applications.