Hundreds of millions of metric tons of plastic waste are generated globally every year. Processing waste into secondary raw material is preferred over energy production and landfilling. However, mechanical recycling generally deteriorates the properties of plastic waste limiting its range of potential applications. Nanocomposite fabrication is a solution to recycle plastic waste into value-added applications due to improved properties generated by nanomaterial reinforcement, however received little study. The aim of this review is to present the current status, identify research gaps and provide topics for further research of polymer nanocomposites prepared from plastic waste in respect to utilized materials, processing methods, enhanced properties, sustainability, economics, nanomaterial safety, and applications. It is found that morphological, mechanical, thermal, flame retardancy, physical, barrier, electrical and shielding properties of plastic waste can be enhanced with low loadings of different nanomaterials making them promising materials for various applications including electronic, shielding, thermal, packaging, filtration, and water treatment. Utilization of plastic waste instead of virgin polymers can be beneficial in respect to economics and sustainability, but the energy intensive and expensive production of the most nanomaterials, and the plastic waste pretreatment methods can negate these benefits. To enhance sustainability, further research should be conducted on utilization of energy friendly nanomaterials in plastic waste nanocomposites. Further research is needed also on polymer nanocomposite safety because of the unknow composition of the plastic waste and the potential for nanomaterial release during nanocomposite’s life cycle. All in all, further research and national regulations and guidance are needed on virgin polymer and plastic waste nanocomposites.