Cancer accounted for 13% of all deaths worldwide in 2005. Although early detection is critical for the successful treatment of many cancers, there are sensitivity limitations associated with current detection methodologies. Furthermore, many traditional anticancer drug treatments exhibit limited efficacy and cause high morbidity. The unique physical properties of nanoscale materials can be utilized to produce novel and effective sensors for cancer diagnosis, agents for tumor imaging, and therapeutics for cancer treatment. Functionalizing inorganic nanoparticles with biocompatible polymers and natural or rationally designed biomolecules offers a route towards engineering responsive and multifunctional composite systems. Although only a few such innovations have reached human clinical trial to date, nanocomposite materials based on functionalized metal and semiconductor nanoparticles promise to transform the way cancer is diagnosed and treated. This review summarizes the current state-of-the-art in the development of inorganic nanocomposites for cancer-related applications.