The preparation, properties and potential applications in drug delivery of biocompatible and biodegradable PLA-PEG and PLGA-PEG nanoparticles are discussed. PLA-PEG and PLGA-PEG nanoparticles have been produced by emulsification-solvent evaporation, solvent displacement and salting out methods. The nanoparticles can be stored as freeze-dried powders, but an adequate amount of a suitable lyoprotectant should be added prior lyophilisation to prevent nanoparticle aggregation and retain nanoparticle redispersibility. The nanoparticles have a core-shell structure with a PLA core and a PEG coating. Their basic colloidal properties and degradation depend on copolymer composition. The PLAPEG and PLGA-PEG nanoparticles exhibit prolonged blood circulation following intravenous administration to animals. The composition of the nanoparticles determine their biodistribution properties, probably through its effects on the effectiveness of the PEG steric barrier and the size of the nanoparticles. The ability of the PLA-PEG and PLGA-PEG nanoparticles to evade rapid phagocytocis has extended the range of sites within the body that the nanoparticles can reach, which has significant implications with regard to their application in controlled drug delivery and targeting. The PLAPEG and PLGA-PEG nanoparticles can be loaded with a variety of bioactive agents achieving satisfactory loading, especially in the case of hydrophobic drugs. The nanoparticles have been investigated for the treatment of infectious diseases and cancer, the intravenous and mucosal delivery of proteins, and oligonucleotide and gene delivery. The results have been encouraging and PLA-PEG and PLGA-PEG nanoparticle formulations, improving the therapeutic potential of both established and new drugs, may be expected to be available in the near future.