Nanoparticles and its application are nowadays emerging as a useful tool for various biosensors, biomedical and drug delivery systems. Nano pharmaceuticals provide enhanced bioavailability and lesser side effects in comparison with the usual conventional medication therapies but on the other hand nanoparticles also causes induction of nanotoxicity on living organisms. The toxicity study of nano pharmaceuticals involves in-vitro as well as in-vivo assessment and analysis techniques to detect its unwanted side effects and improve its therapeutic effectiveness. Dose-response relationship of nanoparticles describe the reactivity of a drug to a specific dose and its physiochemical responses. The biocompatibility of nanoparticles refers to nanomaterial-host interaction and its ability to perform activity without producing any unwanted or undesirable effect into the body. Due to administration of nano pharmaceuticals, direct or indirect immunomodulation can occur into the body. One of the mechanisms involved is generation of oxidative stress following formation of reactive oxygen species causing cytotoxicity. Therefore, it is necessary that various innovative strategies should be adopted for the toxicological assessment, detection and prevention of chances of risk associated with these medication therapies.