Nanoparticles have become more widely applied in industrial, consumer, and therapeutic products over the past decade, and this trend is presumed to persist due to the rapid population growth, industry, urbanization, and intensive agriculture. The manufacturing of nanomaterials is not necessarily accomplished through eco-friendly processes. Certain nanomaterials involve heavy metals. The release of nanomaterials into the environment could result in soil and aquatic system contamination. Once released into water and soil matrices, nanoparticles undergo dynamic transformations, including aggregation, dissolution, and surface modification, which determine their transport and bioavailability and their toxicological profiles. Different studies have consistently reported adverse impacts of metal, carbon, and plastic-based nanomaterials on aquatic organisms, soil microbial community, enzymatic activities, and nutrient cycling processes, mainly through oxidative stress, disruption of the membrane, and release of metal ions. These problems have stimulated intensive research aimed at the prediction of environmental concentrations of nanoparticles in water and soil and for their ecotoxicological effect on aquatic and terrestrial ecosystems. On the other hand, nanomaterials are also showing great potential for sustainable use, such as water purification, soil remediation, immobilization of contaminants, and geotechnical soil improvement, referring to soil stabilization, strength enhancement, permeability reduction, and ground improvement, where low dosages can improve the mechanical properties and respected environmental performance. This paper deals with current research on these competing roles, examining the causes of nanotoxicity as well as their positive geotechnical and remedial applications in water and soil systems.