Applications of nanotechnology for treatment, diagnosis, monitoring, and control of biological systems has recently been referred to as "nanomedicine" by the National Institutes of Health. Research into the rational delivery and targeting of pharmaceutical, therapeutic, and diagnostic agents is at the forefront of projects in nanomedicine. These involve the identification of precise targets (cells and receptors) related to specific clinical conditions and choice of the appropriate nanocarriers to achieve the required responses while minimizing the side effects. Mononuclear phagocytes, dendritic cells, endothelial cells, and cancers (tumor cells, as well as tumor neovasculature) are key targets. Today, nanotechnology and nanoscience approaches to particle design and formulation are beginning to expand the market for many drugs and are forming the basis for a highly profitable niche within the industry, but some predicted benefits are hyped. This article will highlight rational approaches in design and surface engineering of nanoscale vehicles and entities for site-specific drug delivery and medical imaging after parenteral administration. Potential pitfalls or side effects associated with nanoparticles are also discussed.