The development of polymer based nanoparticles as novel drug delivery vehicles has been extensively studied in recent years. The utility of nanoparticles for delivery of therapeutic agents results from their unique chemical composition, which allows for the incorporation of hydrophobic solutes within the nanoparticle core, potentially imparting reduced cytotoxicity and extending drug circulation in vivo. More recently, nanoparticles have been employed as sensing and image enhancement agents. In particular, nanoparticles based on gold chemistry have been utilized in a variety of biomedical applications including diagnostic assays, thermal ablation, radiotherapy enhancement as well as drug and gene delivery. Utilizing these converging technologies, we have developed a novel nanoparticle based vehicle for the simultaneous delivery of therapeutic and imaging agents and combinations thereof. Selective delivery to pathological sites is achieved using ligand-directed localization of nanoparticles at diseased tissue. This form of drug delivery results in improved therapeutic response and allows for concurrent monitoring of drug uptake. Nanoparticles are prepared using a novel mixing technique based on diblock copolymer-controlled nucleation and growth of hydrophobic compounds. In the Flash NanoPrecipitation process, a tangential flow mixing cell is used to provide rapid micromixing of block copolymer, drug solute and imaging agent. The process depends upon the tuning of kinetics of solute precipitation and block copolymer assembly on the nanoparticle surface. The use of impinging jets provides mixing timescales that are shorter than the timescale for nucleation and growth of dissolved solute molecules, which allows for the colloidal stabilization of nucleated particles by block copolymers on the particle surface. This process yields stable nanoparticles at high concentrations with size distributions, morphologies, and drug loading efficiencies not attainable through other technologies. In this work, a biocompatible, biodegradable, amphiphilic diblock copolymer, poly(ethylene glycol)-b-poly(caprolactone) (PEG-b-PCL) is utilized for the formation of nanoparticles encapsulating both drug and imaging agents. PEG-b-PCL is chemically modified with reactive functionalities at the poly(ethylene glycol) terminus. Maleimide, N-hydroxysuccinimide, carboxylic acid, and amine terminated PEG-b-PCL polymers are prepared for selective reaction with sulfhydryl, primary amine and carboxylic acid containing moeities. We employ a low molecular weight compound (folic acid) as a ligand for targeted anti-cancer drug delivery to folate receptor positive tumors. Additionally, the attachment of high molecular weight targeting ligands is demonstrated using bovine albumin serum (BSA) as a model targeting entity. The simultaneous encapsulation of drug (beta-carotene, rifampicin and alpha-tocopherol) and imaging agents (dodecanethiol gold, 7-aminol-4-methylcoumarin and phenoxazone dyes) within targeting nanoparticles at high loading efficiencies is demonstrated. Transmission electron and fluorescence microscopy are utilized for the visualization and monitoring of nanoparticle uptake by neoplastic cells in vitro.