The development of nanoparticle-based drug formulations has yielded the opportunities to address and treat challenging diseases. Nanoparticles vary in size but are generally ranging from 100 to 500 nm. Through the manipulation of size, surface characteristics and material used, the nanoparticles can be developed into smart systems, encasing therapeutic and imaging agents as well as bearing stealth property. Further, these systems can deliver drug to specific tissues and provide controlled release therapy. This targeted and sustained drug delivery decreases the drug related toxicity and increase patient's compliance with less frequent dosing. Nanotechnology has proven beneficial in the treatment of cancer, AIDS and many other disease, also providing advancement in diagnostic testing.