Poor bioavailability of drugs associated with their poor solubility limits the clinical effectiveness of almost 40% of the newly discovered drug moieties. Low solubility, coupled with a high log p value, high melting point and high dose necessitates exploration of alternative formulation strategies for such drugs. One such novel approach is formulation of the drugs as “Nanocrystals”. Nanocrystals are primarily comprised of drug and surfactants/stabilizers and are manufactured by “top-down” or “bottom-up” methods. Nanocrystals aid the clinical efficacy of drugs by various means such as enhancement of bioavailability, lowering of dose requirement, and facilitating sustained release of the drug. This effect is dependent on the various characteristics of nanocrystals (particle size, saturation solubility, dissolution velocity), which have an impact on the improved performance of the nanocrystals. Various sophisticated techniques have been developed to evaluate these characteristics. This article describes in detail the various characterization techniques along with a brief review of the significance of the various parameters on the performance of nanocrystals.