Particles with a size range of 1-100 nm used in various fields of life sciences are called nanoparticles (NPs). Currently, nanotechnology has a wide range of applications in biomedical research, industries and in almost all types of modern technology. The growing applications of nanotechnology in medicine urge scientists to analyze the impact of NPs on human body tissues and the immune system. Easy surface modifications of the NPs enable the modulation of the immune system either by evading the immune system to prevent allergic reactions or by enhancing the immunogenic response. In this review, we discussed the various possible theories and practical implications reported to date for the applications of nanotechnology in immunostimulation and immunosuppression for favorable immune response, such as vaccine delivery and cancer treatments. In the last part of this paper, we also discussed the biocompatibility and unfavorable immunotoxicity of NPs and methods for lowering their toxicity.