For the last 10 years pharmaceutical research and industry has elucidated several innovations and practices in pharmaceutical nanotechnology. Due to the increasing use of nanoparticles, the risk of human exposure rapidly increases and reliable toxicity test systems are urgently needed. Nanotoxicology refers to the study of the interactions of nanostructures with biological systems with an emphasis on the relationship between the physical and chemical properties of nanostructures with induction of toxic biological responses. It involves their unique biodistribution, clearance, accumulation, immune response and metabolism. An understanding of the relationship between the physical and chemical properties of the nanostructure and their in-vivo behavior would provide a basis for assessing toxic response and more importantly could lead to better predictive models for assessing toxicity. The current regulations for nanoparticles containing products are still in a nascent stage. The advantages of nanoparticles led to failures in noticing the toxic outcomes in living organisms. Major changes are required by considering several factors including environmental, health and safety issues. The rapid commercialization of nanotechnology requires thoughtful open discussion of broader societal impacts and urgent toxicological oversight action.