Edible nanoemulsions have great potential for utilization in the food and beverage industries to encapsulate, protect, and deliver lipophilic functional components claimed to have health benefits ("nutraceuticals"), such as carotenoids, flavonoids, phytosterols, polyunsaturated lipids, and oil-soluble vitamins. Nanoemulsions have a number of possible advantages over conventional emulsions for these applications, including high optical clarity, high stability to particle aggregation and gravitational separation, and increased bioavailability of lipophilic substances. Nevertheless, there are concerns about the potential risks associated with ingestion of nanoemulsions due to their ability to alter the behavior of bioactive components within the gastrointestinal tract. At present, there is still a relatively poor understanding of the biological fate of nanoemulsions in the human GI tract, which is holding back the rational design and application of nanoemulsion-based delivery systems for lipophilic bioactive components. This article provides a brief review of the current status of the formation, properties, and potential biological fate of food-grade nanoemulsions. In particular, it focuses on the influence of particle characteristics, such as size and interfacial properties, on the digestion and absorption of lipid nanoparticles.