Nanoparticles (NPs) are being incorporated into pristine polymeric matrices as well as recycled waste polymers to prepare new materials with enhanced properties called polymer nanocomposites (PNCs). There has been an accelerating growth in the field of polymer nanocomposites in the last two decades owing to their tunable and enhanced optical, thermal, electrical, magnetic, and mechanical properties, which make them viable and well-suited for various applications. The addition of nanoparticles in the form of nanosheets, nanotubes, nanospheres, quantum dots, etc., to the polymer matrices reduces the drawbacks of polymers like low mechanical strength, weaker chemical resistivity, etc. due to the large surface area to volume ratio of NPs. Moreover, the interaction of nanoparticles with the polymer chain lowers the permeability of gases and increases the water resistance of the polymer. Due to their remarkable capabilities, polymer nanocomposites have attracted significant theoretical interest as well as a large number of practical applications in a variety of scientific and technological domains. This article provides an overview of the various classes of nanoparticles and different fabrication methods used to produce polymer nanocomposites. Additionally, an effort is made to comprehend the properties and applications of polymer nanocomposites in different areas like wastewater treatment, dye removal, heavy metal and gas sensing, optoelectronics, etc.