Conventional wood-based composites are commonly produced using synthetic, formaldehyde-based resins, derived from petroleum-based constituents, like urea, phenol, and melamine. However, these thermoset adhesives have certain downsides, including the emission of harmful volatile organic compounds, notably formaldehyde, from the finished wood products. The advancements of nanotechnology have created many possibilities for the adhesive sector to innovate and produce a new wave of novel, high-performance adhesives for bonding wood-based composites. Using high aspect ratio nanomaterials as reinforcing agents has shown significant promise in improving the properties of wood-based composites. Therefore, the aim of this chapter is to discuss the recent advances in the use of inorganic and organic nanomaterials as formaldehyde scavengers used in the production of environmentally-friendly, high-performance wood-based composites with enhanced characteristics for a wide range of value-added applications. The challenges and future perspectives of using nanomaterials as formaldehyde scavengers in wood-based composites have also been discussed.