The oral bioavailability of lipophilic bioactive molecules can be greatly increased by encapsulating them within engineered lipid nanoparticles (ELNs), such as micelles, microemulsions, nanoemulsions, or solid lipid nanoparticles (SLNs). After ingestion, these ELNs are disassembled in the gastrointestinal tract (GIT) and then reassembled into biological lipid nanoparticles (mixed micelles) in the small intestine. These mixed micelles solubilize and transport lipophilic bioactive components to the epithelial cells. The mixed micelles are then disassembled and reassembled into yet another form of biological lipid nanoparticle [chylomicrons (CMs)] within the enterocyte cells. The CMs carry the bioactive components into the systemic (blood) circulation via the lymphatic system, thereby avoiding first-pass metabolism. This article provides an overview of the various physicochemical and physiological processes responsible for the assembly and disassembly of lipid nanoparticles outside and inside the GIT. This knowledge can be used to design food-grade delivery systems to improve the oral bioavailability of encapsulated lipophilic bioactive components.