Nanotechnology has brought a variety of new possibilities into biological discovery and clinical practice. In particular, nano-scaled carriers have revolutionalized drug delivery, allowing for therapeutic agents to be selectively targeted on an organ, tissue and cell specific level, also minimizing exposure of healthy tissue to drugs. In this review we discuss and analyze three issues, which are considered to be at the core of nano-scaled drug delivery systems, namely functionalization of nanocarriers, delivery to target organs and in vivo imaging. The latest developments on highly specific conjugation strategies that are used to attach biomolecules to the surface of nanoparticles (NP) are first reviewed. Besides drug carrying capabilities, the functionalization of nanocarriers also facilitate their transport to primary target organs. We highlight the leading advantage of nanocarriers, i.e. their ability to cross the blood-brain barrier (BBB), a tightly packed layer of endothelial cells surrounding the brain that prevents high-molecular weight molecules from entering the brain. The BBB has several transport molecules such as growth factors, insulin and transferrin that can potentially increase the efficiency and kinetics of brain-targeting nanocarriers. Potential treatments for common neurological disorders, such as stroke, tumours and Alzheimer's, are therefore a much sought-after application of nanomedicine. Likewise any other drug delivery system, a number of parameters need to be registered once functionalized NPs are administered, for instance their efficiency in organ-selective targeting, bioaccumulation and excretion. Finally, direct in vivo imaging of nanomaterials is an exciting recent field that can provide real-time tracking of those nanocarriers. We review a range of systems suitable for in vivo imaging and monitoring of drug delivery, with an emphasis on most recently introduced molecular imaging modalities based on optical and hybrid contrast, such as fluorescent protein tomography and multispectral optoacoustic tomography. Overall, great potential is foreseen for nanocarriers in medical diagnostics, therapeutics and molecular targeting. A proposed roadmap for ongoing and future research directions is therefore discussed in detail with emphasis on the development of novel approaches for functionalization, targeting and imaging of nano-based drug delivery systems, a cutting-edge technology poised to change the ways medicine is administered.