The modern eco-friendly materials used in research and innovation today consist of nanocomposites and bio-nanocomposite polymers. Their unique composite properties make them suitable for various industrial, medicinal, and energy applications. Bio-nanocomposite polymers are made of biopolymer matrices that have nanofillers dispersed throughout them. There are several types of fillers that can be added to polymers to enhance their quality, such as cellulose-based fillers, clay nanomaterials, carbon black, talc, carbon quantum dots, and many others. Biopolymer-based nanocomposites are considered a superior alternative to traditional materials as they reduce reliance on fossil fuels and promote the use of renewable resources. This review covers the current state-of-the-art in nanocomposite and bio-nanocomposite materials, focusing on ways to improve their features and the various applications they can be used for. The review article also investigates the utilization of diverse nanocomposites as a viable approach for developing bio-nanocomposites. It delves into the underlying principles that govern the synthesis of these materials and explores their prospective applications in the biomedical field, food packaging, sensing (Immunosensors), and energy storage devices. Lastly, the review discusses the future outlook and current challenges of these materials, with a focus on sustainability.