For many decades, rigorous efforts have been made worldwide to develop a successful oral insulin-delivery system, which still remains an elusive goal. However, over the past few years, tremendous understanding has evolved in the development of biocompatible and biodegradable polymers, synthesis of nanopeptide delivery systems, biocompatibility and its cellular uptake mechanisms. With these advancements, efforts are being directed toward nanoparticle-based oral peptide-delivery systems. It is established that nanoparticles enhance oral bioavailability by facilitating insulin uptake via a transcellular or paracellular pathway. In this process, the particle also reaches the systemic circulation. Hence, biocompatibility and the half-life of the particles in the systemic circulation is an important aspect that needs to be looked into. In this review, the various approaches adopted for nanoparticle-based oral insulin delivery, uptake mechanisms, biocompatibility and bioavailability of the nanoparticle are discussed.