The field of nanotechnology has shown promise in addressing major problems and improving drilling effectiveness. An overview of the difficulties encountered during oil and gas well drilling operations and the demand for creative solutions opens the debate. This review explores how nanotechnology is transforming the oil industry and enhancing performance as a whole. The evaluation of the uses of nanotechnology for better oil recovery, real-time monitoring, innovative materials, drilling fluids, and reservoir characterization are extensively discussed in this review. The primary function of additives is to improve the fundamental characteristics of drilling fluids. The variety of fluid additives available is a reflection of the complex drilling–fluid systems that are currently being used to enable drilling in increasingly difficult subsurface conditions. Common additives used in water- and oil-based drilling fluids include lubrication, shale stability, pH regulation, filtration control, rheology control, viscosification, and pH regulation. Drilling fluids frequently contain filtration control additives such as starch, polyanionic cellulose (PAC), carboxymethyl cellulose (CMC), and nanoparticles (NP). Commonly used rheology-modifier additives are xanthan gum, carboxymethyl cellulose, guar gum powder, and, more recently, salt-responsive zwitterionic polymers that were used as viscosifiers to water-based drilling fluids. The three main additives that regulate pH are citric acid monohydrate, potassium hydroxide, and sodium hydroxide. Additives that stabilize shale, such as potassium and sodium salts and asphaltenes, are often used. A wide range of materials are included in the category of lubricating additives, including polymers, asphaltenes, glass beads, oils of various grades, and oil-surfactants. Various fibrous materials, including wood, cotton, fibrous minerals, shredded tires from vehicles, and paper pulp, are used as additives to control circulation. Furthermore, shredded cellophane, bits of plastic laminate, plate-like minerals like mica flakes, granulated inert materials such as nut shells, and nano-polymers are used in wellbores to reduce fluid loss. The incorporation of nanoparticles into drilling fluids has produced upgraded fluids with better features, including improved lubricity, thermal stability, and filtering capacities. These developments aid in lowering friction, enhancing wellbore stability, and enhancing drilling efficiency. This paper also emphasizes how nanotechnology has made enhanced drilling equipment and materials possible. Drilling equipment’s longevity and performance are increased by nanocomposite materials that have been reinforced with nanoparticles due to their improved mechanical strength, wear resistance, and thermal stability. Advanced reservoir characterisation tools, including nanoparticle tracers and nanoscale imaging methods, can help locate the best drilling sites and increase production effectiveness. On the other hand, nanofluids and nanoemulsions can potentially increase oil recovery because they enhance fluid mobility, lower interfacial tension, and alter rock wettability. Although nanotechnology has many advantages, there are also issues that need to be resolved. For an implementation to be effective, factors including nanoparticle stability, dispersion, and potential environmental effects must be carefully taken into account. This review highlights the need for future research to create scalable manufacturing procedures, improve nanoparticle behaviour, and determine nanomaterials’ long-term environmental effects. In conclusion, this in-depth analysis illustrates the use of nanotechnology in transforming the process of drilling oil and gas wells.