Nanoparticles have the potential to contribute to new modalities in molecular imaging and sensing as well as in therapeutic interventions. In this Nano Focus article, we identify some of the current challenges and knowledge gaps that need to be confronted to accelerate the developments of various applications. Using specific examples, we journey from the characterization of these complex hybrid nanomaterials; continue with surface design and (bio)physicochemical properties, their fate in biological media and cells, and their potential for cancer treatment; and finally reflect on the role of animal models to predict their behavior in humans. ; L.B. and R.L. thank EPSRC (EP/H046143/1) for funding. G.P. thanks the European Union (ERDF European Regional Development Fund) via the INTERREG Upper Rhine program (Nanomatrix). C.M. acknowledges the National Science Foundation (CHE-1240151: Centre for Sustainable Nanotechnology). T.P. acknowledges the financial support of the European project Magnifyco (Contract NMP4-SL-2009-228622). D.P. acknowledges support from INNI, FTA: Nanomedicine for Personalized Theranostics, and from The Leona M. and Harry B. Helmsley Nanotechnology Research Fund. ; Peer Reviewed