Photodynamic therapy (PDT) has attracted a lot of attention as one of the minimally invasive and spatially selective methods of cancer treatment. It makes use of photosensitizers activated by light of a specific wavelength to generate cytotoxic reactive oxygen species (ROS) to selectively kill off cancerous cells leaving normal tissue intact. In as much as PDT performs well in the treatment of superficial malignancies, its application has been hampered by poor light penetration, poor selectivity of photosensitizers on tumor selectivity, and systemic side effects, among others, which restrict its applicability. Nanotechnology has presented revolutionary approaches to address these obstacles by allowing the creation of nanoparticle (NP)-based systems that enhance the photosensitizer aqueous solubility and targeting to the tumors and the effective generation of reactive oxygen species. This review summarizes the recent developments of nanoparticle-mediated PDT in the past ten years, including strategies and designs of nanoplatforms, targeted PDT, photo physical activation strategies, production of ROS, therapeutic safety, and translation. We identify key limitations, including the reproducibility of nanoparticle synthesis, light dosimetry, tumor hypoxia, and regulatory barriers, as well as the emergent innovations that promise to become increasingly important, including theranostic nanomaterials, artificial intelligence (AI) guiding nanomedicine and combination therapies. Taken together, they are a paradigm shift towards a next-generation PDT as a safe, precise and personalized cancer therapy.