The COVID-19 pandemic continues to afflict millions of people without respite. The relentless surge in infections is due to insufficient supplies of appropriate vaccines, the long incubation period and high prevalence of SARS-CoV-2, and the lack of widespread detection and diagnosis. The development of low-cost rapid detection and sensing platforms will prove vital in the race to efficiently detect and diagnose COVID-19. Nanomaterial-based biosensors and detectors are particularly promising in this regard, with the potential to play a significant role in inhibiting the spread of COVID-19 by early detection. In this review, various schemes for the detection and diagnosis of COVID-19 are elaborated, with special emphasis on the unique advantages of nanomaterials for these niche applications. Moreover, smart nanomaterials, i.e., nanomaterials that respond to external stimuli by changing their physicochemical properties, are reviewed and evaluated for novel applications related to COVID-19 detection and diagnosis. The prospects of the reviewed materials and systems are discussed in detail, and a roadmap for future research and development is proposed.