A major aim of medicine has long been the early and accurate diagnosis of clinical conditions, providing an efficient treatment without secondary effects. With the emergence of nanotechnology, the achievement of this goal seems closer than ever. To this end, the development of novel materials and devices operating at the nanoscale range, such as nanoparticles, provides new and powerful tools for imaging, diagnosis and therapy. This review focuses on the significant improvements in performance that nanoparticles offer compared with existing technologies relevant to medicine. Specifically, we address the design of multifunctional nanoparticles as an alternative system for drug and gene delivery, which has great potential for therapy in areas, such as cancer and neuropathologies. Moreover, we discuss the controversy generated by the possible toxic health effects of nanoparticles.