Fluorescence polarization (FP) has been applied in detecting chemicals and biomolecules for early-stage diagnosis, food safety analyses, and environmental monitoring. Compared to organic dyes, inorganic nanomaterials such as quantum dots have special fluorescence properties that can enhance the photostability of FP-based biosensing. In addition, nanomaterials, such as metallic nanoparticles, can be used as signal amplifiers to increase fluorescence polarization. In this review paper, different types of nanomaterials used in in FP-based biosensors have been reviewed. The role of each type of nanomaterial, acting as a fluorescent element and/or the signal amplifier, has been discussed. In addition, the advantages of FP-based biosensing systems have been discussed and compared with other fluorescence-based techniques. The integration of nanomaterials and FP techniques allows biosensors to quickly detect analytes in a sensitive and cost-effective manner and positively impact a variety of different fields including early-stage diagnoses.