A notable increase in cancer-related fatalities and morbidity worldwide is attributed to drug resistance. The factors contributing to drug resistance include drug efflux via ABC transporters, apoptosis evasion, epigenetic alterations, DNA repair mechanisms, and the tumor microenvironment, among others. Systemic toxicities and resistance associated with conventional cancer diagnostics and therapies have led to the development of alternative approaches, such as nanotechnology, to enhance diagnostic precision and improve therapeutic outcomes. Nanomaterial, including carbon nanotubes, dendrimers, polymeric micelles, and liposomes, have shown significant benefits in cancer diagnosis and treatment due to their unique physicochemical properties, such as biocompatibility, stability, enhanced permeability, retention characteristics, and targeted delivery. Building on these advantages, this review is conducted through comprehensive analysis of recent literature to explore the principal mechanisms of drug resistance, the potential of nanomaterials to revolutionize selective drug delivery and cancer treatment. Additionally, the strategies employed by nanomaterials to overcome drug resistance in tumors, such as efflux pump inhibition, multidrug loading, targeted delivery to the tumor microenvironment, and gene silencing therapies are discussed in detail. Furthermore, we examine the challenges associated with nanomaterials that limit their application and impede their transition to clinical use.