Nanotechnology, with its continuous advancement, leads to the development of nanoscale‐level therapeutics to mitigate many complex diseases. This results in the emergence of numerous novel nanomaterials and its composite products into the market such as liposome, polymeric nanoparticles, dendrimers, and nanostructured lipid carrier. However, their application is always determined by a high benefit to risk ratio. Very few research have been done on the toxicity assessment of nanoparticles in the biological system; therefore, the limited knowledge regarding the toxicity profile of nanotherapeutics is available leading to the ignorance of its side effects. Nanoparticles can distribute in the whole body through translocating in the bloodstream by crossing membrane barriers efficiently and shows effect in organs and tissues at cellular and molecular levels. The interaction of nanoparticle with cell may consequences into nanotoxicity. The narrow size distribution, large surface area to mass ratio and surface properties of nanoparticle are significantly associated with nanotoxicity. Nanoparticles can enter into the tissue and cell by invading the membranes and cause cellular injury as well as toxicity. Therefore, the exploration of mechanisms of nanotoxicity has prime importance now a day. The toxicity assessment should be an integral part of the development of nanotherapeutics using various toxicity evaluation models. This review has focused on the exploration of different nanostructures for therapeutic delivery system along with its physicochemical characteristics responsible for adverse effects on human biology, various toxicity evaluation models, and environmental and regulatory hurdles.