Nanotechnology offers excellent prospects for application in biology and medicine. It is used for detecting biological molecules, imaging, and as therapeutic agents. Due to nano-size (1-100 nm) and high surface-to-volume ratio, nanomaterials possess highly specific and distinct characteristics in the biological environment. Recently, the use of nanomaterials as sensors, theranostic, and drug delivery agents has become popular. The safety of these materials is being questioned because of their biological toxicity, such as inflammatory responses, cardiotoxicity, cytotoxicity, inhalation problems, etc., which can have a negative impact on the environment. This review paper focuses primarily on the toxicological effects of nanomaterials along with the mechanisms involved in cell interactions and the generation of reactive oxygen species by nanoparticles, which is the fundamental source of nanotoxicity. We also emphasize the greener synthesis of nanomaterials in biomedicine, as it is non-hazardous, feasible, and economical. The review articles shed light on the complexities of nanotoxicology in biosystems and the environment.