Evolution has been continuously honing the design of antibodies to function as specific molecular markers that are able to alert the immune system to the presence of pathogenic antigens, and to recruit complement- and Fc receptor-bearing effector cells. During the past 25 years, the versatility of antibodies has been applied to several therapeutic applications. The development of new technologies, combined with data obtained using a new generation of antibody reagents, have allowed the adaptation of the design of antibodies to better match drug development requirements. Nanobodies are therapeutic proteins derived from the heavy-chain variable (VHH) domains that occur naturally in heavy-chain-only Ig molecules in camelidae. These VHH domains are the smallest known antigen-binding antibody fragments. Nanobodies can be easily produced in prokaryotic or eukaryotic host organisms, and their unique biophysical and pharmacological characteristics render these molecules ideal candidates for drug development. This review describes the structural properties of nanobodies and focuses on their unique features, which distinguishes these molecules from other antibody formats and small-molecule drugs. Possible therapeutic applications of nanobodies are discussed and data from phase I clinical trials of the novel 'first-in-class' anti-thrombotic agent ALX-0081 (Ablynx NV) are presented.