Nanotechnology provides new materials in the nanometer range with many potential applications in clinical medicine and research. Due to their unique size-dependent properties nanomaterial such as nanoparticles offer the possibility to develop both new therapeutic and diagnostic tools. Thus, applied nanotechnology to medical problems--nanomedicine--can offer new concepts that are reviewed. The ability to incorporate drugs into nanosystems displays a new paradigm in pharmacotherapy that could be used for cell-targeted drug delivery. Nontargeted nanosystems such as nanocarriers that are coated with polymers or albumin and solid lipid particles have been used as transporter in vivo. However, nowadays drugs can be coupled to nanocarriers that are specific for cells and/or organs. Thus, drugs that are either trapped within the carriers or deposited in subsurface oil layers could be specifically delivered to organs, tumors and cells. These strategies can be used to concentrate drugs in selected target tissues thus minimizing systemic side effects and toxicity. In addition to these therapeutic options, nanoparticle-based "molecular" imaging displays a field in which this new technology has set the stage for an evolutionary leap in diagnostic imaging. Based on the recent progress in nanobiotechnology there is potential for nanoparticles and -systems to become useful tools as therapeutic and diagnostic tools in the near future.