Nanotechnology offers the food industry a number of new approaches for improving the quality, shelf life, safety, and healthiness of foods. Nevertheless, there is concern from consumers, regulatory agencies, and the food industry about potential adverse effects (toxicity) associated with the application of nanotechnology in foods. In particular, there is concern about the direct incorporation of engineered nanoparticles into foods, such as those used as delivery systems for colors, flavors, preservatives, nutrients, and nutraceuticals, or those used to modify the optical, rheological, or flow properties of foods or food packaging. This review article summarizes the application of both inorganic (silver, iron oxide, titanium dioxide, silicon dioxide, and zinc oxide) and organic (lipid, protein, and carbohydrate) nanoparticles in foods, highlights the most important nanoparticle characteristics that influence their behavior, discusses the importance of food matrix and gastrointestinal tract effects on nanoparticle properties, emphasizes potential toxicity mechanisms of different food-grade nanoparticles, and stresses important areas where research is still needed.