Nanotechnology offers many potential benefits to cancer research through passive and active targeting, increased solubility/bioavailablility, and novel therapies. However, preclinical characterization of nanoparticles is complicated by the variety of materials, their unique surface properties, reactivity, and the task of tracking the individual components of multicomponent, multifunctional nanoparticle therapeutics in in vivo studies. There are also regulatory considerations and scale-up challenges that must be addressed. Despite these hurdles, cancer research has seen appreciable improvements in efficacy and quite a decrease in the toxicity of chemotherapeutics because of 'nanotech' formulations, and several engineered nanoparticle clinical trials are well underway. This article reviews some of the challenges and benefits of nanomedicine for cancer therapeutics and diagnostics.