The development of nanotechnology for engineering applications is still in its infancy; however, the main benefits and barriers allow the utilization of nanotechnology in engineering to be explored. Advances in technology demand new materials with superior combinations of light weight, high performance, affordability, and versatility. This promotes the development of functional nanomaterials which integrate at least one other function beyond the mechanical aspect. Functional nanomaterials can be designed by integrating thermal, electrical, magnetic, optical, mechanical and possibly other functionalities to provide a unique combination of the individual capabilities, and much research efforts have been devoted in recent years to this advancement. This lecture will explore this important field and highlight its recent developments, challenges and potential applications.