This review paper collects the recent updates regarding the use of nanomaterials in cosmetics. Special focus is given to the applications of nanomaterials in the cosmetic industry, their unique features, as well as the advantages of nanoscale ingredients compared to non-nanoscale products. The state-of-the-art practices for physicochemical and toxicological characterization of nanomaterials are also reviewed. Moreover, special focus is given to the current regulations and safety assessments that are currently in place regarding the use of nanomaterials in cosmetics—the new 2019 European guidance for the safety assessment of nanomaterials in cosmetics, together with the new proposed methodologies for the toxicity evaluation of nanomaterials. Concerns over health risks have limited the further incorporation of nanomaterials in cosmetics, and since new nanomaterials may be used in the future by the cosmetic industry, a detailed characterization and risk assessment are needed to fulfill the standard safety requirements.