Medicines for the treatment of most human pathologies are encumbered by unwanted side effects that arise from the deposition of an effective drug into the wrong tissues. The logical remedy for these undesirable properties involves selective targeting of the therapeutic agent to pathologic cells, thereby avoiding collateral toxicity to healthy cells. Since significant advantages can also accrue by incorporating a therapeutic or imaging agent into a nanoparticle, many laboratories are now combining both benefits into a single formulation. This review will focus on the major guiding principles in the design of ligand-targeted nanoparticles, including optimization of their chemical and physical properties, selection of the ideal targeting ligand, engineering of the appropriate surface passivation and linker strategies to achieve selective delivery of the entrapped cargo to the desired diseased cell.