Although modern multimodal treatment of pediatric cancer has resulted in long-term cure of many patients, clinical success has come with significant acute and chronic morbidity. Targeted therapy using anticancer agents encapsulated in nanoparticles holds considerable promise in further improving efficacy and reducing toxic side effects. This review highlights the current strategies toward developing such therapeutic tools with an emphasis on using liposomes as flexible delivery vehicles. Potential strengths and technical difficulties encountered in advancing this platform are summarized. Critical functional determinants of nanoparticle delivery systems and future strategies to improve efficacy and specificity are described.