Health of natural aquatic ecosystems has become a cause of concern in recent times due to uncontrolled anthropogenic influences. So, the importance of monitoring the health of aquatic ecosystems has become a cause of concern like never before. However, monitoring of water through physical or chemical parameters is time consuming and not cheap. To tide over this issue, bioindicators have come to the forefront due to their high responsiveness to environmental protuberances. Diatoms are one of the most abundant forms of photosynthetic protists in aquatic environment that is well recognized as a biomonitoring tool by international organizations. Diatoms are nanocontainers that can remove different pollutants like trace metals, polymers and drugs which are harmful for living organisms. Thus, the presence of diatoms in natural aquatic habitats makes the water bodies less toxic and more habitable for other aquatic organisms. Even though diatoms are tolerant algal group, overexposure to pollutants may lead to morphological and physiological changes in diatoms. Thus, observation of morphometric changes and community composition of diatoms in aquatic habitats can be an excellent biomonitoring tool to observe the health of natural aquatic ecosystems against pollutant exposure. Diatoms have also been well documented as an excellent framework for production of novel metal nanoparticles and nanoconjugates under experimental conditions. These diatoms are excellent biomining tool for green synthesis of novel nanoparticles. In the process of nanoscale particle synthesis, diatom can convert novel metals into nontoxic or less toxic forms by conjugation with different functional groups on diatom cells. The other important aspect of diatom-derived nanoparticle is their ability in pollutant removal. The biogenic nanoparticles have recently been well established as resource for successful removal of pollutants and as surfactants. Thus, the present work will aim to highlight the applicability of diatoms both as a biomonitoring tool as well as an efficient entity in production of novel metal nanomaterials for removal of pollutants both under experimental and in situ conditions.