The proof-of-concept of nanomaterials (NMs) in the fields of imaging, diagnosis, treatment, and theranostics shows the importance in biopharmaceuticals development due to structural orientation, on-targeting, and long-term stability. However, biotransformation of NMs and their modified form in human body via recyclable techniques are not explored owing to tiny structures and cytotoxic effects. Recycling of NMs offers advantages of dose reduction, re-utilization of the administered therapeutics providing secondary release, and decrease in nanotoxicity in human body. Therefore, approaches like in-vivo re-processing and bio-recycling are essential to overcome nanocargo system-associated toxicities such as hepatotoxicity, nephrotoxicity, neurotoxicity, and lung toxicity. After 3–5 stages of recycling process of some NMs of gold, lipid, iron oxide, polymer, silver, and graphene in spleen, kidney, and Kupffer’s cells retain biological efficiency in the body. Thus, substantial attention towards recyclability and reusability of NMs for sustainable development necessitates further advancement in healthcare for effective therapy. This review article outlines biotransformation of engineered NMs as a valuable source of drug carriers and biocatalyst with critical strategies like pH modification, flocculation, or magnetization for recovery of NMs in the body. Furthermore, this article summarizes the challenges of recycled NMs and advances in integrated technologies such as artificial intelligence, machine learning, in-silico assay, etc. Therefore, potential contribution of NM’s life-cycle in the recovery of nanosystems for futuristic developments require consideration in site-specific delivery, reduction of dose, remodeling in breast cancer therapy, wound healing action, antibacterial effect, and for bioremediation to develop ideal nanotherapeutics.