Nanotoxicology has become the subject of intense research for more than two decades. Thousands of articles have been published but the space in understanding the nanotoxicity mechanism and the assessment is still unclear. Recent researches clearly show potential benefits of nanomaterials (NMs) in diagnostics and treatment, targeted drug delivery, and tissue engineering owing to their excellent physicochemical properties. However, these NMs display hazardous health effect then to the greater part of the materials because of small size, large surface area-to-volume ratio, quantum size effects, and environmental factors. Nowadays, a large number of NMs are used in industrial products including several medical applications, consumer, and healthcare products. However, they came into the environment without any safety test. The measurement of toxicity level has become important because of increasing toxic effects on living organisms. New realistic mechanism-based strategies are still needed to determine the toxic effects of NMs. For the assessment of NMs toxicity, reliable and standardized procedures are necessary. This review article provides systematic studies on toxicity of NMs involving manufacturing, environmental factors, eco-toxic and genotoxic effects, some parameters which have been ignored of NMs versus their biological counterparts, cell heterogeneity, and their current challenges and future perspectives.