The last decade has seen a flourishing in the study of the properties of nanoparticles (NPs) and nanomaterials (NMs) used in various industrial applications including nanomedicine. The ability of nanotechnology to shape matter on a molecular scale is opening the door to a new generation of diagnostics, imaging agents and drugs for detecting and treating disease at its earliest stages. Recent advances in nanoscience and nanotechnology provide unique opportunities for targeted delivery of drugs, while minimizing their unwanted side-effects and toxicity. In oncology, NMs have been successfully used in diagnostics and treatment. As NMs can cross the blood–brain barrier they can be used to treat patients with brain tumours, Alzheimer's and Parkinson's diseases, AIDS, epilepsy, and others. However, the unique properties of NPs and NMs also raise concerns about their possible adverse effects on human health and the environment. In a regulatory perspective NM safety has been under discussion for several years already. The main challenge is that current knowledge of the toxicity of NMs is insufficient to adequately assess the risks arising from their use. The understanding of cellular uptake, transport across biological barriers, distribution in the body and possible mechanisms of toxicity is essential, to avoid possible serious adverse health effects. In this chapter, we will try to elucidate challenges associated with the application of NMs in nanomedicine, and to answer the question, whether existing assays and approaches are sufficient to cover the unique aspects of nanotoxicology arising from these compounds’ nanosize.