Ophthalmic drugs are delivered to ocular tissues predominantly via relatively simple formulations, such as topically dosed water-soluble drug solutions and water-insoluble drug suspensions in ointments. An ideal topical drug delivery system should possess certain desirable properties, such as good corneal and conjunctival penetration, prolonged precorneal residence time, easy instillation, non-irritative and comfortable to minimize lachrymation and reflex blinking, and appropriate rheological properties. In general, ocular efficacy is closely related to ocular drug bioavailability, which may be enhanced by increasing corneal drug penetration and prolonging precorneal drug residence time. To improve ocular bioavailability of topically dosed ophthalmic drugs, a variety of ocular drug delivery systems, such as hydrogels, microparticles, nanoparticles, microemulsions, liposomes and collagen shields, have been designed and investigated. These newer systems may, to some extent, control drug release and maintain therapeutic levels in ocular tissues over a prolonged period of time. This review focuses on the in vitro, ex vivo and in vivo studies of ophthalmic drugs formulated in nanoparticles published over the past two decades. The progress and development issues relating to ocular disposition, pharmacokinetics, efficacy and safety of the nanoparticle-formulated ophthalmic drugs are specifically addressed. Information and discussions summarized in this review are helpful for pharmaceutical scientists to develop better ophthalmic therapeutics.