Nanotechnology is an emerging branch of science for designing tools and devices of size 1 to 100 nm with unique function at the cellular, atomic and molecular levels. The concept of using nanotechnology in medical research and clinical practice is known as nanomedicine. Nanoparticles possess some novel properties not seen with the macro molecules and they can be manipulated by attaching therapeutic components to help in diagnosis and treatment. They can also be used to probe cellular movements and molecular changes associated with pathological states. Nanodevices like carbon nanotubes to locate and deliver anticancer drugs at the specific tumour site are under research. Nanotechnology promises construction of artificial cells, enzymes and genes. This will help in the replacement therapy of many disorders which are due to deficiency of enzymes, mutation of genes or any repair in the synthesis of proteins. Currently nanodevices like respirocytes, microbivores and probes encapsulated by biologically localized embedding have a greater application in treatment of anaemia and infections. Thus in the present scenario, nanotechnology is spreading its wings to address the key problems in the field of medicine. Hence this review discusses in detail the applications of nanotechnology in medicine with more emphasis on drug delivery and therapy.