The optoelectrical and magnetic characteristics of naturally existing iron-based nanostructures, especially hematite and magnetite nanoparticles (H-NPs and M-NPs), gained significant research interest in various applications, recently. The main purpose of this Review is to provide an overview of the utilization of H-NPs and M-NPs in various environmental remediation. Iron-based NPs are extensively explored to generate green energy from environmental friendly processes such as water splitting and CO2 conversion to hydrogen and low molecular weight hydrocarbons, respectively. The latter part of the Review provided a critical overview to use H-NPs and M-NPs for the detection and decontamination of inorganic and organic contaminants to counter the environmental pollution and toxicity challenge, which could ensure environmental sustainability and hygiene. Some of the future perspectives are comprehensively presented in the final portion of the script, optimiztically, and it is supported by some relevant literature surveys to predict the possible routes of H-NPs and M-NPs modifications that could enable researchers to use these NPs in more advanced environmental applications. The literature collection and discussion on the critical assessment of reserving the environmental sustainability challenges provided in this Review will be useful not only for experienced researchers but also for novices in the field.