Nanoparticles are sphere-like biocompatible materials made of inert silica, metal or crystals of a few nanometers in size. They are emerging as a novel class of therapeutics for cancer treatment. Being more selective and specific toward their targets, nanoparticles have the ability to enhance the anticancer effects and to simultaneously reduce systemic toxicity compared with conventional therapeutics. Furthermore, they offer the potential to overcome drug resistance leading to higher intracellular drug accumulation. Nowadays, nanotechnologies are applied to molecular diagnostics and incorporated in cutting-edge molecular diagnostic methods, such as DNA and protein microarray biochips. Nanotechnologies enable diagnosis at the single-cell and single-molecule levels. Recent progress in cancer nanotechnology raises exciting opportunities for specific drug delivery. The purpose of this review is to give an overview about different types of nanoparticles and to summarize the latest results regarding their diagnostic and therapeutic applications in the clinic with more focus on cancer treatment. Furthermore, we discuss opportunities, limitations, and challenges faced by therapeutic nanoparticles.