We proposed and have been developing real-time, noninvasive monitoring of blood oxygenation, total hemoglobin concentration, and thermotherapy including hyperthermia, coagulation, and cryotherapy. In this paper we propose to use the optoacoustic technique for monitoring of nanoparticle-mediated photothermal therapy (NPT) of tumors. NPT is based on heating exogenous strongly-absorbing nanoparticles selectively delivered in tumors. Real-time monitoring of NPT is necessary for precise tumor therapy with minimal damage to normal tissues. In this study we injected PEGylated and non-PEGylated carbon nanoparticles in nude mice bearing human tumors (5-15 mm) and irradiated the tumors for 10 minutes with nanosecond Nd:YAG laser pulses which produced both thermal damage to the tumors and optoacoustic signals for monitoring NPT in real time. Irradiation of tumors was performed during or after (3 or 24 hours) nanoparticle injection. Amplitude and temporal parameters of optoacoustic signals (measured with a custom-made wide-band optoacoustic probe) correlated well with nanoparticle injection, temperature rise in tumors, and tumor coagulation. Substantial thermal damage in large areas of the tumors was produced when optimal irradiation parameters were used. Monte Carlo modeling of light distribution in tumors and optoacoustic theory were applied to study kinetics of nanoparticle concentration in the tumors. Our results demonstrated that the optoacoustic technique can be used for real-time monitoring of NTP and provide precise tumor therapy with minimal damage to normal tissues.