In the present scenario, most of the developed and new discovered drugs are posing real challenge to the formulation scientists due to their poor aqueous solubility which in turn is responsible for poor bioavailability. One of the approach to overcome above problem is the packaging of the drug in to particulate carrier system. Among various carriers, lipid emerged as very attractive candidate because of its unique property of enhancing the bioavailability of poorly water soluble drugs. Solid lipid, one of the physical forms of lipid, is used to formulate nanoparticles, popularly known as Solid lipid nanoparticles (SLNs), as an alternative carrier system to emulsions, liposomes and polymeric micro- and nano-particles. SLNs combine advantages of the traditional systems but avoid some of their major disadvantages. This paper reviews numerous production techniques for SLNs along with their advantages and disadvantages. Special attention is paid to the characterization of the SLNs by using various analytical tools. It also emphasizes on physical state of lipid (supercooled melts, different lipid modifications).