Biodegradable nanoparticles formulated from poly (D,L-lactide-co-glycolide) (PLGA) have been extensively investigated for sustained and targeted/localized delivery of different agents including plasmid DNA, proteins and peptides and low molecular weight compounds. Research about the mechanism of intracellular uptake of nanoparticles, their trafficking and sorting into different intracellular compartments, and the mechanism of enhanced therapeutic efficacy of nanoparticle-encapsulated agent at cellular level is more recent and is the primary focus of the review. Recent studies in our laboratory demonstrated rapid escape of PLGA nanoparticles from the endo-lysosomal compartment into cytosol following their uptake. Based on the above mechanism, various potential applications of nanoparticles for delivery of therapeutic agents to the cells and tissue are discussed.