In modern agriculture, nanotechnology was recognized as a potentially transformative innovation. Nanopolymers as coating matrix in nano-biofertilizer has a massive impact on agricultural productivity. The integration of nanotechnology with biofertilizers has led to the creation of nano-biofertilizer formulations that enhance nutrient delivery, improve plant growth, and increase resistance to environmental stress. Nanopolymers, both synthetic and biogenic, including chitosan, cellulose, gelatin, sodium alginate, starch, and polyvinyl alcohol, are utilized as encapsulating materials. They are effective in ensuring controlled nutrient release and shielding beneficial microorganisms from external environmental conditions. Studies indicate that nano-biofertilizers improve soil quality, raise crop yields, and reduce the usage of chemical fertilizers to enhance sustainable agricultural practices. The review also addresses the microbial encapsulation methodology, release kinetics, phytotoxicity, challenges and future prospects of nano-biofertilizer technology, including nanoparticle-bacteria interaction, scalability, and regulatory considerations. This paper elaborates the potential and limitations of nano-biofertilizers, providing insights for future advancements in the agriculture field.