As a proud alumnus of Rice University (class of '77) I get to follow this closely. Since I graduated, Rice has become the leader in this type of chemistry, using a multi-disciplinary approach which brings computer scientists, chemists, engineers and sometimes even economists together on a single paper.
One technique now drawing wide interest is Eugene Zubarev's work building gold nanostructures using a biological process. (There is he, right and above.) Attach the gold to an antibody and it will find the tumor. Attach your chemo drug to the gold, and the tumor can be killed without impacting the rest of the body.
The gold nanostructures may be just two nanometers in diameter, and can easily pass through holes in the blood vessels feeding the tumors, which can be as wide as 1,000 nanometers across.
Another Rice team has also managed to get usable images of carbon nanotubes inside a living creature, specifically a fruit fly. Detecting and monitoring nanotubes, assuring they do no harm and can be retrieved, is another vital step in bringing more nanotech to medicine.
This is high-end science which can deliver real results without the collateral damage found in current therapies. It may be just a few years from practical use. And it's going to transform medicine as we know it.