The environment consists of wide diversity, of which, an integral and most diversifying part is the living organisms, and hence it is imperative to design novel strategies that could alleviate pollutants and detect them at very minute levels. The functionalization of nanomaterials provides a very facile and efficient tool for the design of robust sensors that could detect pollutants that contaminate air, water, and soil. Because of their nanoscale size, these materials have enhanced surface‐to‐volume ratio, which in turn provide more reaction sites for the analyte interaction and enables highly specific and sensitive detection. Different nanomaterials like metal/metal oxide nanoparticles, quantum dots, carbon‐based nanomaterials, and miscellaneous nanomaterials like polymer, dendrimers, metal‐organic frameworks are functionalized with suitable ligands for efficient detection of a wide range of pollutants such as heavy metals, pesticides, industrial wastes, volatile organic compounds, toxic gases, and environmental pathogens with efficient level of sensitivity. In this review, we will briefly discuss different types of functionalized nanomaterials, strategies adopted for their functionalization, detection methodologies pursued for specific sensing and detection of different types of pollutants and their critical analysis, and future outlook.