The article discusses the transformative role of nanotechnology and microbial fuel cells (MFCs) in revolutionizing sustainable energy generation. MFCs function by converting biomass and organic waste into electricity, offering an eco-friendly alternative to fossil fuels. Recent advancements in nanotechnology have significantly improved MFC efficiency by enhancing electron transfer rates, expanding surface areas, and optimizing electrode materials. The review explores the essential components of MFCs, including anodes, cathodes, and proton exchange membranes (PEMs), highlighting the crucial role of microorganisms in facilitating extracellular electron transfer (EET) for energy conversion. Various biomass pretreatment methods and optimization techniques like electrode modification and pH control are discussed to enhance MFC performance. Applications of MFCs in bioremediation, wastewater treatment, biosensors, and power generation are emphasized, with a focus on MFC-based biosensors for environmental and medical purposes. Despite challenges like low power output and high costs, innovative strategies involving nanomaterials, electroactive microorganisms, and advanced membranes are proposed to improve MFC efficiency. The article concludes that nanotechnology-enabled MFCs, combined with engineered microbes and optimized designs, hold great potential for transforming sustainable energy generation and biosensing applications, paving the way for a cleaner and more efficient future.