The new generation of nanotechnology-based drug formulations is challenging the accepted ways of cancer treatment. Multi-functional nanomaterial constructs have the capability to be delivered directly to the tumor site and eradicate cancer cells selectively, while sparing healthy cells. Tailoring of the nano-construct design can result in enhanced drug efficacy at lower doses as compared to free drug treatment, wider therapeutic window, and lower side effects. Nanoparticle carriers can also address several drug delivery problems which could not be effectively solved in the past and include reduction of multi-drug resistance effects, delivery of siRNA, and penetration of the blood-brain-barrier. Although challenges in understanding toxicity, biodistribution, and paving an effective regulatory path must be met, nanoscale devices carry a formidable promise to change ways cancer is diagnosed and treated. This article summarizes current developments in nanotechnology-based drug delivery and discusses path forward in this field. The discussion is done in context of research and development occurring within the NCI Alliance for Nanotechnology in Cancer program.