Polyethylene glycol conjugation or linking with the system is called PEGylation. Many novel drug systems are used for the delivery of drugs and bioactive substances to particular sites in a controlled or sustained manner, but various side effects or shortcomings restrict their use for the intended purpose. The shortcomings such as RES uptake, drug leakage, immunogenicity, stability, hemolytic toxicity etc. can generally be overcome by PEGylation of novel drug delivery systems such as liposomes, proteins, enzymes, drugs, nanoparticles etc. In this article the whole aspect of PEGylation starting from activation and derivatisation of poly (ethylene glycol) to the linking and designing of systems and their purification and characterization is discussed. The various properties of Pegylated systems are also discussed.