Nanotechnology has been successfully implemented in many applications, such as nanoelectronics, nanobiomedicine, and nanodevices. However, this technology has rarely been applied to the oil and gas industry, especially in upstream exploration and production. The oil and gas industry needs to improve oil recovery and exploit unconventional resources. The cost of research and oil production is under immense pressure, and it is becoming more difficult to justify such investment when the crude oil price is weak and depressed. There is a widespread belief that nanotechnology may be exploited to develop novel nanomaterials with enhanced performance to combat these technological barriers. Increasing funding resources from governmental and global oil industry have been allocated to exploration, drilling, production, refining, and wastewater treatment. For example, nanosensors allow for precise measurement of reservoir conditions. Nanofluids prepared using functional nanomaterials may exhibit better performance in oil production processes, and nanocatalysts have improved the efficiency in oil refining and petrochemical processes. Nanomembranes enhance oil, water and gas separation, oil and gas purification, and the removal of impurities from wastewater. Functional nanomaterials can play an important role in the production of smart, reliable, and more durable equipment. In this review paper, we summarize the research progress and prospective applications of nanotechnology and nanomaterials in the oil and gas industry.