Nanotechnology has been identified as a boon in diverse areas including the food, pharma, and cosmetics industries. Bioactive compounds are phytochemicals that show additional health benefits or therapeutic properties. Nanotechnology has been utilized to exploit the benefits of bioactive compounds to a greater extent. Nanoencapsulated formulations of bioactive compounds have been developed to enhance their stability, solubility, and bioavailability, therefore revolutionizing the applications of bioactive compounds. Though these formulations seem beneficial, the consumption of these nanosized bioactive formulations as drugs or food supplements can pose considerable toxic effects so proper assessment of safety and optimization of dosage is of utmost significance. The materials and methods used in the process of nanoencapsulation, their physiochemical properties, bioavailability, and biodistribution of the bioactive compounds all affect the efficacy, safety, and toxicity of the developed nanoformulation. To manage high efficacy along with safety, effective regulatory considerations have been imposed on the utilization of nanomaterials and associated approaches by concerned authorities of different countries like the United States Food and Drug Administration, European Union, etc. This chapter illustrates the materials, methods and, quality attributes of nanoencapsulated bioactive compounds which can determine the safety and toxicity of the nanoformulations. Details of quality recommendations and regulatory considerations formulated by responsible agencies for the safety assessment of nanoencapsulated bioactive products have also been documented which will support further research and policy-making.