Nanotechnology is being widely studied in bone repair or regeneration treatments in the form of scaffolds because of improved efficacy and selective targeting in comparison to conventional approaches. Nanoparticle-based drug delivery is a choice in many conditions, such as bone infections, cancer bone metastasis, osteosarcoma, inflammatory diseases, and many other conditions like osteoarthritis and bone regeneration. Nanoencapsulated systems are being studied not only for synthetic molecules but also for protein molecules (gene delivery) for delivery to bone. Functionalized biomaterials, containing bioactive molecules, such as ceramics, polymers, proteins, and metals, are being widely explored for bone-regenerative therapies, including bone grafting, tissue engineering, and implants to stabilize fractures or to replace joints. Although, the research done is still in the developing phase, the last decade has witnessed successful use of single functionalized and/or multifunctionalized nanoparticles for treatment of bone diseases. Research approaches mainly focus on the interactions of nanoparticles with bone cells and tissue, depending on their composition, size, and shape. Detailed analysis of nanoparticle effects in the area of bone scaffold is carried out in this chapter. However, the toxicity outcome for many developed bone scaffold systems affected to some extent along with the use of nanotechnology in raw material formation of scaffolds is briefly discussed.