Paclitaxel is one of the best antineoplastic drugs found from nature in the past decades, which has been found effective against a wide spectrum of cancers including ovarian cancer, breast cancer, small and non small cell lung cancer, colon cancer, head and neck cancer, multiple myeloma, melanoma, and Kaposis sarcoma. Like many other anticancer drugs, it has difficulties in clinical administration due to its poor solubility in water and most pharmaceutical reagents. In its current clinical application, an adjuvant called Cremophor EL has to be employed, which has been found to be responsible for many serious side effects. Nanoparticles of biodegradable polymers can provide an ideal solution to such an adjuvant problem and realize a controlled and targeted delivery of the drug with better efficacy and less side effects. With further development, such as particle size optimization and surface coating, nanoparticle formulation of paclitaxel can promote a new concept of chemotherapy to realize its full efficacy and to improve quality of life of the patients, which includes personalized chemotherapy, local chemotherapy, sustained chemotherapy, oral chemotherapy, chemotherapy across the blood-brain barrier, chemotherapy across the microcirculation barrier, etc. The present research proposes a novel formulation for fabrication of nanoparticles of poly(lactic-co-glycolic acid) (PLGA) by a modified solvent extraction / evaporation technique, in which natural emulsifiers, such as phospholipids, cholesterol and vitamin E TPGS are creatively applied to achieve high drug encapsulation efficiency, desired drug released kinetics, high cell uptake and high cytotoxicity. The nanoparticles composed of various recipes and manufactured under various conditions were characterized by laser light scattering (LLS) for size and size distribution, scanning electron microscopy (SEM) and atomic force microscopy (AFM) for morphological properties, X-ray photoelectron spectroscopy (XPS) and Fourier Transformation Infrared Spectroscopy (FTIR) for surface chemistry, zeta-potential for surface charge, and differential scanning calorimetry (DSC) for the thermogram properties. The drug encapsulation efficiency and the drug release kinetics under in vitro conditions were measured by high performance liquid chromatography (HPLC). It was found that these natural emulsifiers have great advantages for nanoparticle formulation of paclitaxel over the traditional macromolecular emulsifiers, such as polyvinyl alcohol (PVA). Nanoparticles of desired small size and narrow size distribution can be obtained. The drug encapsulation efficiency can be achieved as high as 100 %. The released kinetics can be made under control. The HT-29 cancer cell line experiment showed that after 24 hours of incubation, the cell mortality caused by the drug administered by such nanoparticle formulation could be more than 13 times higher than that caused by the free drug under similar conditions.