Nanoparticles (NPs) provide several advantages over the small molecule drugs including prolonged circulation time and enhanced delivery to targeted sites. Once a NP enters the body, it interacts with host’s immune system and is engulfed by cells of the mononuclear phagocyte system (MPS). The interaction between NPs and the immune cells can result in immunosuppression or immunostimulation, which may enhance or reduce the treatment effects of NPs. Therefore, it is critical to understand the interactions between NPs and the immune system in order to optimize the treatment benefit and minimize the undesirable toxicities of NPs. This review elaborates on the interaction between NP and the MPS and its impacts on the pharmacokinetics (PK) and pharmacodynamics (PD) of NPs and applications for inflammatory diseases. This review also encompasses an overview of NPs being developed for treatment of inflammatory diseases.