Current advances in nanotechnology have led to the development of the new field of nanomedicine, which includes many applications of nanomaterials and nanodevices for diagnostic and therapeutic purposes. The same unique physical and chemical properties that make nanomaterials so attractive may be associated with their potentially calamitous effects on cells and tissues. Our recent study demonstrated that aspiration of single-walled carbon nanotubes elicited an unusual inflammatory response in the lungs of exposed mice with a very early switch from the acute inflammatory phase to fibrogenic events resulting in pulmonary deposition of collagen and elastin. This was accompanied by a characteristic change in the production and release of proinflammatory to anti-inflammatory profibrogenic cytokines, decline in pulmonary function, and enhanced susceptibility to infection. Chemically unmodified (nonfunctionalized) carbon nanotubes are not effectively recognized by macrophages. Functionalization of nanotubes results in their increased recognition by macrophages and is thus used for the delivery of nanoparticles to macrophages and other immune cells to improve the quality of diagnostic and imaging techniques as well as for enhancement of the therapeutic effectiveness of drugs. These observations on differences in recognition of nanoparticles by macrophages have important implications in the relationship between the potentially toxic health effects of nanomaterials and their applications in the field of nanomedicine.