Novel engineered nanoparticles (NPs), nanomaterial (NM) products and composites, are continually emerging worldwide. Many potential benefits are expected from their commercial applications; however, these benefits should always be balanced against risks. Potential toxic effects of NM exposure have been highlighted, but, as there is a lack of understanding about potential interactions of nanomaterials (NMs) with biological systems, these side effects are often ignored. NPs are able to translocate to the bloodstream, cross body membrane barriers effectively, and affect organs and tissues at cellular and molecular levels. NPs may pass the blood–brain barrier (BBB) and gain access to the brain. The interactions of NPs with biological milieu and resulted toxic effects are significantly associated with their small size distribution, large surface area to mass ratio (SA/MR), and surface characteristics. NMs are able to cross tissue and cell membranes, enter into cellular compartments, and cause cellular injury as well as toxicity. The extremely large SA/MR of NPs is also available to undergo reactions. An increased surface area of the identical chemical will increase surface reactivity, adsorption properties, and potential toxicity. This review explores biological pathways of NPs, their toxic potential, and underlying mechanisms responsible for such toxic effects. The necessity of toxicological risk assessment to human health should be emphasised as an integral part of NM design and manufacture.