Nutrient management is always a great concern for better crop production. The optimized use of nutrients plays a key role in sustainable crop production, which is a major global challenge as it depends mainly on synthetic fertilizers. A novel fertilizer approach is required that can boost agricultural system production while being more ecologically friendly than synthetic fertilizers. As nanotechnology has left no field untouched, including agriculture, by its scientific innovations. The use of nanofertilizers in agriculture is in the early stage of development, but they appear to have significant potential in different ways, such as increased nutrient-use efficiency, the slow release of nutrients to prevent nutrient loss, targeted delivery, improved abiotic stress tolerance, etc. This review summarizes the current knowledge on various developments in the design and formulation of nanoparticles used as nanofertilizers, their types, their mode of application, and their potential impacts on agricultural crops. The main emphasis is given on the potential benefits of nanofertilizers, and we highlight the current limitations and future challenges related to the wide-scale application before field applications. In particular, the unprecedent release of these nanomaterials into the environment may jeopardize human health and the ecosystem. As the green revolution has occurred, the production of food grains has increased at the cost of the disproportionate use of synthetic fertilizers and pesticides, which have severely damaged our ecosystem. We need to make sure that the use of these nanofertilizers reduces environmental damage, rather than increasing it. Therefore, future studies should also check the environmental risks associated with these nanofertilizers, if there are any; moreover, it should focus on green manufactured and biosynthesized nanofertilizers, as well as their safety, bioavailability, and toxicity issues, to safeguard their application for sustainable agriculture environments.