Laser ablation is a method for fabricating various kinds of nanoparticles including semiconductor quantum dots, carbon nanotubes, nanowires, and core shell nanoparticles. In this method, nanoparticles are generated by nucleation and growth of laser-vaporized species in a background gas. The extremely rapid quenching of vapor is advantageous in producing high purity nanoparticles in the quantum size range (< 10 nm). In this review, the formation mechanism of nanoparticles by laser ablation is summarized. Recent progress on the control of nanoparticle size and the challenges for functional nanoparticle synthesis by advanced laser ablation technology are then discussed.