This review gives a short overview on the widespread use of nanostructured and nanocomposite materials for disease diagnostics, drug delivery, imaging and biomedical sensing applications. Nanoparticle interaction with a biological matrix/entity is greatly influenced by its morphology, crystal phase, surface chemistry, functionalization, physicochemical and electronic properties of the particle. Various nanoparticle synthesis routes, characterization, and functionalization methodologies to be used for biomedical applications ranging from drug delivery to molecular probing of underlying mechanisms and concepts are described with several examples (150 references).