Chemotherapy is a major therapeutic approach for the treatment of localized and metastasized cancers. Whereas potent chemotherapeutic agents seem promising in the test tube, clinical trials often fail due to unfavorable pharmacokinetics, poor delivery, low local concentrations, and limited accumulation in the target cell. The pathophysiology of the tumor vasculature and stromal compartment presents a major obstacle to effective delivery of agents to solid tumors. Poor perfusion of the tumor, arterio-venous shunting, necrotic and hypoxic areas, as well as a high interstitial fluid pressure work against favorable drug uptake. Thus, targeted drug delivery using long-circulating particulate drug carriers such as hydrogels of controlled size (<100 nm diameter) holds immense potential to improve the treatment of cancer by selectively providing therapeutically effective drug concentrations at the tumor site [through enhanced permeability and retention (EPR) effect] while reducing undesirable side effects. This review focuses on the progress of targeted delivery of nanoparticulated anticancer drug such as doxorubicin chemically conjugated with dextran and encapsulated in chitosan nanoparticles to solid tumor with reduced side effect of drug. Regulated particle size and long circulation of these hydrogel nanoparticles in blood help them accumulate in tumor tissue through EPR effect as evident from the significant regression of the tumor volume. The cardiotoxicity of doxorubicin can be minimized by coupling the drug with dextran and encapsulating it in chitosan nanoparticles.