The diagnosis and treatment of cancer or tumor at the cellular level will be greatly improved with the development of techniques that enable the delivery of analyte probes and therapeutic agents into cells and cellular compartments. Organic and inorganic nanoparticles that interface with biological systems have recently attracted widespread interest in the fields of biology and medicine. The new term nanomedicine has been used recently. Nanoparticles are considered to have the potential as novel intravascular or cellular probes for both diagnostic (imaging) and therapeutic purposes (drug/gene delivery), which is expected to generate innovations and play a critical role in medicine. Target-specific drug/gene delivery and early diagnosis in cancer treatment is one of the priority research areas in which nanomedicine will play a vital role. Some recent breakthroughs in this field recently also proved this trend. Nanoparticles for drug delivery and imaging have gradually been developed as new modalities for cancer therapy and diagnosis. In this article, we review the significance and recent advances of gene/drug delivery to cancer cells, and the molecular imaging and diagnosis of cancer by targeted functional nanoparticles.