Drought stress remains one of the most detrimental environmental constraints that hampers plant growth and development resulting in reduced yield and leading to economic losses. Studies have highlighted the beneficial role of carbon-based nanomaterials (NMs) such as multiwalled carbon nanotubes (MWNTs), single-walled carbon nanotubes (SWNTs), graphene, fullerene, and metal-based nanoparticles (NPs) (Ag, Au, Cu, Fe2O3, TiO2, and ZnO) in plants under unfavorable conditions such as drought. NPs help plants cope with drought by improving plant growth indices and enhancing biomass. It improves water and nutrient uptake and utilization. It helps retain water by altering the cell walls and regulating stomatal closure. The photosynthetic parameters in NP-treated plants reportedly improved with the increase in pigment content and rate of photosynthesis. Due to NP exposure, the activation of enzymatic and nonenzymatic antioxidants has reportedly improved. These antioxidants play a significant role in the defense system against stress. Studies have reported the accumulation of osmolytes and secondary metabolites. Osmolytes scavenge reactive oxygen species, which can cause oxidative stress in plants. Secondary metabolites are involved in the water retention process, thus improving plant coping strategies with stress. The deleterious effects of drought stress are alleviated by reducing malondialdehyde resulting from lipid peroxidation. Reactive oxygen species accumulation is also controlled with NP treatment. Furthermore, NPs have been reported to regulate the expression of drought-responsive genes and the biosynthesis of phytohormones such as abscisic acid, auxin, gibberellin, and cytokinin, which help plants defend against drought stress. This study reviewed 72 journal articles from 192 Google Scholar, ScienceDirect, and PubMed papers. In this review, we have discussed the impact of NP treatment on morphological, physio-biochemical, and molecular responses in monocot and dicot plants under drought conditions with an emphasis on NP uptake, transportation, and localization.