Nanobiotechnology is an immensely potential invention, which is expected to bring about revolutionary changes in many aspects of essential human needs including medical treatments and foods. Although the technology has passed through its embryonic stage, its medical applications in preparing and delivering drugs to target cells of human bodies to cure incurable diseases are still under scientific scrutiny. A 2007 study suggests that Australia needs to have a review of its regulatory framework for nanotechnology by 2017. This article examines the current regulation of nanotechnology and its medical applications in Australia, and observes that it would be premature to impose any stringent regulation at this stage on medical experimentations. We are of the view that an excessively precautionary policy may hinder further research, which is critical to discovering the benefit and harm with certainty. Hence, in the greater interest of the facilitation of research and affirmation of benefits of this technology, we recommend that adopting a hybrid regulatory method composed of self-regulation and accommodating government regulation would be an appropriate policy approach to the regulation of nanobiotechnology. We also accept the need for a set of internationally harmonized policy principles to guide our actions in relation to this technology.