Among beneficial applications of nanotechnology, nanomedicine offers perhaps the greatest potential for improving human conditions and quality of life. Engineered nanomaterials (ENMs), with their unique properties, have potential to improve therapy of many human disorders. The properties that make ENMs so useful could also lead to unintentional adverse health effects. Challenges arising from physicochemical properties of ENMs, their characterization, exposure, and hazard assessment and other key issues of ENM safety are discussed. There is still scant knowledge about ENM cellular uptake, transport across biological barriers, distribution within the body, and possible mechanisms of toxicity. The safety of ENMs should be tested to minimize possible risk before the application. However, existing toxicity tests need to be adapted to fit to the unique features related to the nanosized material and appropriate controls and reference material should be considered.