Use of chemical fertilizers has become significantly important for enhancing crop productivity and profitability. The chemical fertilizers, though prove very useful in improving growth and yield of crops, but exert harmful to the environment and human health. With an ever-growing demand for food production amidst environmental challenges and resource constraints, the exploration of innovative alternative solutions has become essential. Nanofertilizers are promising alternatives to traditional fertilizers. The cost-effectiveness, eco-friendliness, non-toxicity and increased stability make nanofertilizers more effective than chemical fertilizers. Nanofertilizers can play an important role in achieving sustainability in agriculture by precisely delivering and releasing nutrients using nanoscale active substances in a controlled manner. This also reduces the leaching of nutrients into groundwater. Additionally, nanofertilizers have the potential to improve tolerance to environmental stresses when applied in combination with microorganisms. The present review provides information related to types of nanofertilizers, mechanisms of their interaction in soil and plants, role of using nanofertilizers in improving crop productivity and nutrient management. The challenges and risks of using nanofertilizers, such as their safety for living things, impact on the environment and cost-effectiveness have been also discussed. This review aims to share knowledge about sustainable farming and provide information about benefits and challenges of using nanotechnology in crop production.