Short pulse laser interaction with a metal nanoparticle surrounded by water is investigated with a hydrodynamic computational model that includes a realistic equation of state for water and accounts for thermoelastic behavior and the kinetics of electron-phonon equilibration in the nanoparticle. Computational results suggest that, at laser fluences close to the threshold for vapor bubble formation, the region of biological damage due to the laser-induced thermal spike and the interaction of the pressure wave with internal cell structures can be localized within short distances from the absorbing particle comparable to the particle diameter. This irradiation regime is suitable for targeted generation of thermal and mechanical damage at the sub-cellular level. (C) 2007 Published by Elsevier B.V.