This review critically examines microwave-assisted synthesis (MAS) as a sustainable strategy for nanomaterial fabrication, addressing the environmental limitations of conventional synthetic approaches. MAS offers substantial advantages through rapid and uniform heating, which significantly reduces energy consumption, reaction time, and hazardous waste generation. By systematically comparing MAS and traditional methods in terms of energy efficiency, reaction performance, waste minimization, selectivity, product uniformity, and scalability, this review establishes a comprehensive framework for sustainable nanomaterial production. Green chemistry metrics and sustainability assessment tools are employed to evaluate the environmental impact and industrial feasibility of diverse MAS protocols. Furthermore, the integration of MAS with eco-friendly precursors—such as plant extracts, biomolecules, and ionic liquids—for synthesizing key nanomaterial classes, including metal nanoparticles, carbon quantum dots (CQDs), and hybrid nanocomposites, is discussed in depth. The review also explores practical applications in catalysis, environmental remediation, energy storage, and biomedical technologies, emphasizing how MAS-derived nanomaterials contribute to addressing current sustainability challenges. Finally, it outlines existing limitations and future research directions for scaling MAS to industrial applications, underscoring its potential to revolutionize nanomaterial manufacturing in alignment with circular economy principles.