Over the past decade, metal-based nanoparticles (MNPs) have gained much popularity in the field of nanomedicine owing to their exceptional physiochemical properties. Easy surface functionalization and conjugation with therapeutic moieties, stability, inertness, and inherent anticancer activities make MNPs promising diagnostic and therapeutic agents. Among different sizes of MNPs, which greatly affect their biodistribution and clearance, ultrasmall metal nanoparticles with the size less than 5 nm demonstrate unique pharmacokinetic properties, making them suitable for nanomedicinal applications. Therefore, many efforts have been made to synthesize various kinds of ultrasmall metal nanoparticles. In this study, a revolutionary synthesis method, termed as liquid diffusion synthesis (LDS) was developed to produce ultrasmall metal nanoparticles. In this new approach, simply immersing a dialysis bag containing an aqueous solution of a metal salt mixed with citric acid in a NaOH solution reservoir for tens of minutes, few-nm sized nanoparticles form inside the dialysis bag. Not only is this process exceptionally simple and cost effective, conducting at room temperature using aqueous solution of metal salt, citric acid and NaOH, but also it can produce a wide range of colloidal nanocrystals, covering all possible ultrasmall metal nanocrystals used as nanomedicine. Using this method, the synthesis of ultrasmall metal nanocrystals of Co, Ni, Cu, Au, Ag, Pd, Pt, and Lu have been demonstrated. Also, ultrasmall metal oxide nanoparticles can be produced using the same method. Ultrasmall nanoparticles of MnO, RuO2, Cu2O, FeO, ZnO2, and CeO2 have been synthesized. A mechanistic study was conducted to reveal the nanoparticle formation mechanism. It was found that the gradual change of the solution pH caused by the diffusion of OH- ions through the dialysis membrane played an essential role in the formation of these nanocrystals. Synthesized ultrasmall Cu nanoparticles have preliminarily been tested for its in vivo biomedical applications. It shows that Cu nanoparticles are stable in phosphate-buffered saline and fatal bovine serum. In vivo studies shows the renal clearability of Cu nanoparticles; about 67% of nanoparticles is excreted via urine after 48 hours of injection.