Research and treatment in the nervous system is challenged by many physiological barriers posing a major hurdle for neurologists. The CNS is protected by a formidable blood brain barrier (BBB) which limits surgical, therapeutic and diagnostic interventions. The hostile environment created by reactive astrocytes in the CNS along with the limited regeneration capacity of the PNS makes functional recovery after tissue damage difficult and inefficient. Nanomaterials have the unique ability to interface with neural tissue in the nano-scale and are capable of influencing the function of a single neuron. The ability of nanoparticles to transcend the BBB through surface modifications has been exploited in various neuro-imaging techniques and for targeted drug delivery. The tunable topography of nanofibers provides accurate spatio-temporal guidance to regenerating axons. This review is an attempt to comprehend the progress in understanding the obstacles posed by the complex physiology of the nervous system and the innovations in design and fabrication of advanced nanomaterials drawing inspiration from natural phenomenon. We also discuss the development of nanomaterials for use in Neuro-diagnostics, Neurotherapy and the fabrication of advanced nano-devices for use in opto-electronic and ultrasensitive electrophysiological applications. The energy efficient and parallel computing ability of the human brain has inspired the design of advanced nanotechnology based computational systems. However, extensive use of nanomaterials in neuroscience also raises serious toxicity issues as well as ethical concerns regarding nano implants in the brain. In conclusion we summarize these challenges and provide an insight into the huge potential of nanotechnology platforms in neuroscience. (C) 2016 Elsevier Ltd. All rights reserved.