We seek to understand how nanotechnology can contribute to the development of a more sustainable society in general, and to investigate Swedish nanotechnology in particular. On the one hand, the research interest is on how nanoscience can be turned into used products, that is, innovation. On the other hand, we acknowledge that innovation itself is the main producer of risk in modern societies. Inspired by sociology and economics of innovation, we try to capture this by introducing the term ‘reflexive system of innovation’ to denote a system made up of heterogenous elements, such as discursive components (expressions of knowledge and normative and regulative stands) and organizational components (actors and knowledge), evolving in a non-linear way through external influences as well as self re-enforcing and self-regulating processes. We present the evolution of a Swedish nanotechnology system from the 1980s to the present, as it moves through phases characterized by different kinds of discourse and organization. Evaluating the Swedish case against the concept of a reflexive system of innovation, we find advanced academic knowledge production but a lack of interconnectivity between actors, few actors outside the research community entering the system and a weak function of anticipation, guidance and risk handling. Broad national nanotechnology initiatives (NNIs) may be important for the crystallization of the desired processes, but because neither innovation nor risk can be fully contained, an NNI may only be part of the input to a fully fledged reflexive system of innovation in nanotechnology.