Cancer nanotherapeutics have shown promise in resolving some of the limitations of conventional drug delivery systems such as nonspecific biodistribution and targeting, lack of water solubility, low therapeutic indices, and poor oral bioavailability. Moreover, cancer nanotechnology has the potential of improving current approaches to cancer detection, diagnosis, and imaging. Recently, nanotechnology and molecular imaging have been combined to generate nanoparticles that simultaneously facilitate cancer therapy and diagnosis, the so called theragnostic nanoparticles. The aim of our review is to highlight recent developments within the context of the current knowledge of nanotechnology, to recall the experimental steps that have brought to the clinical development and application of nanoparticles, and explain the biological rationale for their use with oncologic patients. In particular, we summarize recent findings with respect to possible new applications for therapy and diagnosis, and their specific properties. Moreover, we report the more recent prospects in gene therapy, the possibility of using new drug delivery methods, the action of nanoparticles on the immune system and apoptosis, and the concrete possibility of detecting and characterizing circulating tumor cells or of developing new technologies in drug discovery.