Nanotechnology has attained significant attention from researchers in past decades due to its numerous advantages, such as biocompatibility, biodegradability, and improved stability over conventional drug delivery systems. The fabrication of engineered nanoparticles (ENPs), including carbon nanotubes (CNTs), fullerenes, metallic and metal oxide-based NPs, has been steadily increasing day due to their wide range of applications from household to industrial applications. Fabricated ENPs can release different materials into the environment during their fabrication process. The effect of such materials on the environment is the primary concern with due diligence on the safety and efficacy of prepared NPs. In addition, an understanding of chemistry, reactivity, fabrication process, and viable mechanism of NPs involved in the interaction with the environment is very important. To date, only a limited number of techniques are available to assess ENPs in the natural environment which makes it difficult to ascertain the impact of ENPs in natural settings. This review extensively examines the environmental effects of ENPs and briefly discusses useful tools for determining NP size, surface charge, surface area, and external appearance. In conclusion, the review highlights the potential risks associated with ENPs and suggests possible solutions.