Nanodiamonds (NDs) are versatile nanoparticles that are currently being investigated for a variety of applications in drug delivery, biomedical imaging and nanoscale sensing. Although initial studies indicate that these small gems are biocompatible, there is a great deal of variability in synthesis methods and surface functionalization that has yet to be evaluated. Here we present a comprehensive analysis of the cellular compatibility of an array of nanodiamond subtypes and surface functionalization strategies. These results demonstrate that NDs are well tolerated by multiple cell types at both functional and gene expression levels. In addition, ND-mediated delivery of daunorubicin is less toxic to multiple cell types than treatment with daunorubicin alone, thus demonstrating the ability of the ND agent to improve drug tolerance and decrease therapeutic toxicity. Overall, the results here indicate that ND biocompatibility serves as a promising foundation for continued preclinical investigation.