Paclitaxel (Taxol) is one of the best antineoplastic drugs found from nature in the past decades. Like many other anticancer drugs, there are difficulties in its clinical administration due to its poor solubility. Therefore an adjuvant called Cremophor EL has to be employed, but this has been found to cause serious side-effects. However, nanoparticles of biodegradable polymers can provide an ideal solution to the adjuvant problem and realise a controlled and targeted delivery of the drug with better efficacy and fewer side-effects. The present research proposes a novel formulation for fabrication of nanoparticles of biodegradable polymers containing d-alpha-tocopheryl polyethylene glycol 1000 succinate (vitamin E TPGS or TPGS) to replace the current method of clinical administration and, with further modification, to provide an innovative solution for oral chemotherapy. In the modified solvent extraction/evaporation technique employed in this research, the emulsifier/stabiliser/additive and the matrix material can play a key role in determining the morphological, physicochemical and pharmaceutical properties of the produced nanoparticles. We found that vitamin E TPGS could be a novel surfactant as well as a matrix material when blended with other biodegradable polymers. The nanoparticles composed of various formulations and manufactured under various conditions were characterised by laser light scattering (LLS) for size and size distribution, scanning electron microscopy (SEM) and atomic force microscopy (AFM) for morphological properties, X-ray photoelectron spectroscopy (XPS) for surface chemistry and differential scanning calorimetry (DSC) for thermogram properties. The drug encapsulation efficiency (EE) and the drug release kinetics under in vitro conditions were measured by high performance liquid chromatography (HPLC). It was concluded that vitamin E TPGS has great advantages for the manufacture of polymeric nanoparticles for controlled release of paclitaxel and other anti-cancer drugs. Nanoparticles of nanometer size with narrow distribution can be obtained. A drug encapsulation efficiency as high as 100% can be achieved and the release kinetics can be controlled.