The incorporation of nanomaterials in paper matrices has received considerable attention for diversifying the use of traditional paper-based materials. The incorporation of nanomaterials into a paper matrix results in paper-based nanocomposites that enhance the mechanical, barrier, optical, and functional qualities of the base paper. Various nanomaterials, such as those made from wood components, inorganic, organic, carbon-based, and composite nanoparticles, can be added to the paper. Interaction among nanomaterials, paper matrix, and other additives is crucial for understanding paper functionality while preserving the basic properties of the paper matrix. Different types of nanomaterials, such as nanoclay, nano-silica, cellulose nanofiber, nano-titanium dioxide, silver nanoparticles, carbon nanotubes, etc., give rise to various types of paper nanocomposites. This chapter discusses the aforementioned types of nanocomposites, along with their preparation strategies, including dip coating, in situ synthesis, vacuum-assisted filtration, blending, drop casting, layer-by-layer assembly, surface treatment, wet-end addition, size press treatment, direct assembly, and the sol–gel method. By using these techniques, nanomaterials can be successfully incorporated into the paper matrix, improving its qualities and capabilities. The application of these paper-based nanocomposites in flexible electronics, antibacterial packaging, water purification, energy storage, and smart packaging has also been discussed in this chapter. This chapter also highlights the challenges of cost, compatibility, scale-up, and performance stability associated with paper-based nanocomposites. Environmental impact, regulatory compliance, and health and safety issues are also featured.