Due to the huge surface area to volume ratio and other unique properties, nanomaterials can produce novel mode of actions that could be beneficiary or deleterious on interacting with biological systems. Biocompatibility is the ability of the nanomaterials to perform their designed tasks without causing the body to have additional adverse reactions. On the other hand, safety evaluation examines possible toxicological impact and adverse outcomes that such compounds may have on biological tissues, organs and cells. Some of the physical properties such as surface area, charge, shape and chemical composition of nanomaterials have a marked influence on the toxicity and biocompatibility of the material. For example, high surface reactivity nanoparticles can trigger cytotoxicity, inflammation or oxidative stress reactions. The therapeutic behavior, including safety, of the nanomaterial may be affected by immunological events arising from its likely differential engagement with immune cells. Thus, to assess possible cytotoxicity, genotoxicity, and immunogenicity, extensive assessment involves cell culture studies, as well as animal studies. The regulatory guidelines put forward the principles of standardization and further application of complex analytical and quantification processes in order to ensure the accuracy in biocompatibility and safety assessments. This involves molecular analysis to quantify DNA or protein injury; imaging methods; and assays of cell survival. These evaluations are necessary for formulating policies that eliminate risk factors for health concerns together with harnessing nanoparticles’ healing benefits. The fact the nanotechnology is progressing rapidly also poses a risk to environment and health and therefore the measures aimed at minimizing the risks have to be modified very frequently.