Nanoparticles with entrapped, nonpolar compounds are disclosed, and a method for their synthesis. The nanoparticles are readily dissolved or dispersed in water. For example, the entrapped nonpolar compounds may include pharmaceutically-active compounds, or natural colorants. The nanoparticles have a nonpolar compound core, an intermediate surfactant layer, and an outer crosslinked polymeric protective layer. In a prototype example, alginic acid nanoparticles were prepared with beta-carotene entrapped in the core, with lecithin as the intermediate surfactant layer. In an alternative embodiment, a layer-by-layer assembly technique may be used to entrap the colorant within nanoparticles.