Theranostics is a promising field that combines therapeutics and diagnostics into single multifunctional formulations. This field is driven by advancements in nanoparticle systems capable of providing the necessary functionalities. By utilizing these powerful nanomedicines, the concept of personalized medicine can be realized by tailoring treatment strategies to the individual. This review gives a brief overview of the components of a theranostic system and the challenges that designing truly multifunctional nanoparticles present. Considerations when choosing a class of nanoparticle include the size, shape, charge, and surface chemistry, while classes of nanoparticles discussed are polymers, liposomes, dendrimers, and polymeric micelles. Targeting to disease states can be achieved either through passive or active targeting which uses specific ligands to target receptors that are overexpressed in tumors and common targeting elements are presented. To image the interactions with disease states, contrast agents are included in the nanoparticle formulation. Imaging options include optical imaging techniques, computed tomography, nuclear based, and magnetic resonance imaging. The interplay between all of these components needs to be carefully considered when designing a theranostic system.