Preparation of highly monodispersed polymeric hydrophilic nanoparticles having a size of up to 100 nm (in which may have drug substances encapsulated therein. The process comprises subjecting a mixture of an aqueous solution of a monomer or preformed polymer reverse micelles, a cross linking agent, initiator, and optionally, a drug or target substance to polymerization. The polymerized reaction product is dried for removal of solvent to obtain dried nanoparticles and surfactant employed in the process of preparing reverse micelles. The dry mass is dispersed in aqueous buffer and the surfactant and other toxic material are removed therefrom.