Use of nanotechnology for targeted drug delivery is receiving a significant attention by academia as well as pharmaceutical industries. Water-soluble, polymeric nanoparticles have evolved as an alternative to other available systems mainly because of their non-toxic and biodegradable nature. In this work, attempts are made to understand the mechanism of the formation of nanoparticulate polyelectrolyte complexes (PEC). It is shown that the size, surface charge and stability of these PEC depends mainly on interaction between oppositely charged polyions which in turn is controlled by pH, ionic strength, stabilizer concentrations, molecular weight of polymers used and the effective mixing of polyionic solutions.