The impressive mechanical properties, reinforcing capability, abundance, low weight, low filler load requirements, and biodegradable nature of nanoparticles from bioresources such as cellulose, make it an ideal candidate for the development of green polymer nanocomposites. Significant amount of research in this area is primarily focused on the extraction, qualitative surface modification, and evaluation of mechanical performance after filling in polymer matrixes at different ratios. The extreme agglomeration tendency, hydrophilic nature, difficult dispersion in many organic solvents of cellulose nanoparticles are the challenging obstacles when fabrication of such nanocomposites is concerned. Traditional processing of polymer composites mainly through extrusion and melt compounding, is not easily possible in case of cellulose nanocomposites due to higher possibility of poor dispersion and degradation of nanofibers. Therefore, issues related to the fabrication of nanofiber-based products and their application appears to be one of the most important areas in order to enhance their competitiveness with other nanoparticles. This review is aimed to summarize the recent accomplishments and issues involving the use of cellulose nanoparticles in the development of new polymeric materials. POLYM. ENG. SCI., 2013. © 2012 Society of Plastics Engineers