The rapid clearance of circulating nanoparticles from the blood stream coupled with their high uptake by liver and spleen has thus far been overcome by reducing the particle size, and by making the particle surface hydrophilic with poloxamers and poloxamines. We have prepared hydrogel nanoparticles of polyvinylpyrrolidone of a size less than 100 nm diameter with precise size distribution. Since the inner cores of these particles are also hydrophilic, these particles are capable of encapsulating water-soluble compounds. Biodistribution of these particles shows practically negligible (<1%) uptake by the macrophages in liver and spleen, and approximately 5-10% of these particles remain in circulation even 8 h after i.v. injection. Increasing the surface hydrophobicity as well as particle size can increase the RES uptake of these particles. Because of longer residence in blood, the hydrogel nanoparticles have potential therapeutic applications particularly in cancer: the water-soluble cytotoxic agents encapsulated in these particles can be targeted to tumors while minimizing the likelihood of toxicity to reticuloendothelial system (RES).