TRAIL is a member of the tumor necrosis factor superfamily that can largely trigger apoptosis in a wide variety of cancer cells, but not in normal cells. However, insufficient exposure to cancer tissues or cells and drug resistance has severely impeded the clinical application of TRAIL. Recently, nanobiotechnology has brought about a revolution in advanced drug delivery for enhanced anticancer therapy using TRAIL. With the help of materials science, immunology, genetic engineering, and protein engineering, substantial progress is made by expressing fusion proteins with TRAIL, engineering TRAIL on biological membranes, and loading TRAIL into functional nanocarriers or conjugating it onto their surfaces. Thus, the nanoparticle-based TRAIL (nanoTRAIL) opens up intriguing opportunities for efficient and safe bioapplications. In this review, the mechanisms of action and biological function of TRAIL, as well as the current status of TRAIL treatment, are comprehensively discussed. The application of functional nanotechnology combined with TRAIL in cancer therapy is also discussed.