In vitro drug release kinetics studies are routinely performed to examine the ability of new drug formulations to modulate drug release. The underlying assumption is that the studies are performed in a sufficiently dilute solution, where the drug release is not limited by the solubility and the difference in release kinetics profile reflects the performance of a drug carrier in vivo. This condition is, however, difficult to meet with poorly water-soluble drug formulations, as it requires a very large volume of release medium relative to the formulation mass, which makes it challenging to measure the drug concentration accurately. These difficulties are aggravated with nanoparticle (NP) formulations, which are hard to separate from the release medium and thus require a dialysis bag or repeated high-speed centrifugation for sampling. Perhaps for these reasons, drug release kinetics studies of NPs of poorly water-soluble drugs are often performed in suboptimal conditions in which the NPs are not sufficiently diluted. However, such a practice can potentially underestimate drug release from NPs, leading to an inaccurate prediction that the NPs will attenuate the drug activity in vivo. Here we perform release kinetics studies of two different NP formulations of paclitaxel, a representative poorly water-soluble drug, according to common practices in the literature. We find that the drug release from NPs can be substantially underestimated depending on the choice of the release medium, NP/medium ratio, and handling of release samples. We discuss potential consequences of underestimating drug release, ending with suggestions for future studies with NP formulations of poorly water-soluble drugs.