Nanotechnology is rapidly expanding into the biomedical field. At the Institute for Lasers, Photonics and Biophotonics, research in nanotechnology has focused on the development of surface functionalized nanoparticles for diagnostics and targetted therapy. This technology provides a platform for the development of new imaging, diagnostic and therapeutic modalities. For bioimaging and diagnostics, nanoparticles are fabricated containing rare-earth ions which exhibit two-photon, anti-stokes luminescence by frequency up-converting inftared to visible light. We have successfully prepared the phosphor containing nanoparticles having a size similar to25 nm with a silica shell around it which helps in aqueous dispersabilty, inhibits water quenching with nanophosphors and allows functionalization for covalent binding of bioprobes for targeting. The coupling of specific peptides, proteins or nucleic acid sequences to the silica shell will allow for the selective detection of biological entities and will have applications in bioimaging, flow cytometry, ELISA and DNA/RNA hybridization systems. Therapeutically, this nanoparticle platform was used to develop "nanoclinics" which can selectively target specific cancer cells. Our prototypic nanorlinic utilizes magnetocytolysis to effect distruction of luteinizing hormone-releasing hormone (LH-RH) receptor positive cancers. Bioadhesive nanoparticles can also provide a novel mechanism for controlled drug delivery. Presently only 1-3 % of the topically administered Brimonidine penetrates the cornea and reaches intraocular tissues. A nanoparticle of the bioadhesive polymer, polyacrylic acid (PAA), incorporating the ocular drug, Brimonidine, has been prepared. This formulation would prolong drug contact in the precorneal area resulting in reduced drug cost to the patient.