Nanomedicine is rapidly expanding in the world due to its potential impact in alleviating various critical problems related to health. In this short review, we highlight the developments in nanomedicine in Sri Lanka through the work carried out by various scientists within the country. Potential challenges in the field and obstacles for conversion to clinical products will also be discussed. Even though there are limited contributions in relation to nano-drug carriers, antibacterial agents, and bone prostheses, the research focused on vaccine development, diagnosis, and imaging tools, and high-throughput screening platforms have not been developed. The main emphasis has been on therapeutic applications and anticancer drug delivery. Many hybrid biocompatible materials have been developed for drug delivery applications; however, work has been limited to in vitro studies due to various reasons. These findings can be extended to in vivo studies by strengthening the collaboration between nanotechnologists and health-related scientists, whose contribution at the clinical stages is paramount. Because of the slow pace of infrastructure development and related policies for clinical trials, many discoveries are terminated at the publication stage. Therefore, product development and commercialization are very challenging in the Sri Lankan context. The attraction of venture capitalists, investors, and government commitment represent current challenges for the product development and implementation of nanomedicine applications within the country.