Current modalities of diagnosis and treatment of various diseases, especially cancer have major limitations such as poor sensitivity or specificity and drug toxicities respectively. Newer and improved methods of cancer detection based on nanoparticles are being developed. They are used as contrast agents, fluorescent materials, molecular research tools and drugs with targeting antibodies. Paramagnetic nanoparticles, quantum dots, nanoshells and nanosomes are few of the nanoparticles used for diagnostic purposes. Drugs with high toxic potential like cancer chemotherapeutic drugs can be given with a better safety profile with the utility of nanotechnology. These can be made to act specifically at the target tissue by active as well as passive means. Other modalities of therapy such as heat induced ablation of cancer cells by nanoshells and gene therapy are also being developed. This review discusses the various platforms of nanotechnology being used in different aspects of medicine like diagnostics and therapeutics. The potential toxicities of the nanoparticles are also described in addition to hypothetical designs such as respirocytes and microbivores. The safety of nanomedicine is not yet fully defined. However, it is possible that nanomedicine in future would play a crucial role in the treatment of human diseases and also in enhancement of normal human physiology.