Oil spills and oily wastewater from industries such as petrochemicals and food production release millions of tons of oil into aquatic ecosystems, causing severe environmental and ecological damage. Traditional oil/water separation methods, including centrifugation, skimming, and chemical coagulation, are often energy-intensive, costly, and can lead to secondary pollution from toxic chemicals. Membrane technology presents a promising, energy-efficient alternative with high separation performance and simple operation. However, conventional synthetic membranes made from materials like polystyrene (PS), polyacrylonitrile (PAN), polyvinylidene fluoride (PVDF), and polydimethylsiloxane (PDMS) contribute to long-term environmental pollution and resource depletion. Eco-friendly biopolymer-based membranes, produced from renewable resources such as cellulose (CL), polylactic acid (PLA), polyvinyl alcohol (PVA), chitosan (CS), and sodium alginate (SA), face challenges including weak mechanical strength, low durability, and scalability issues. Recent advances in nano-biocomposite membranes that incorporate nanofillers, such as graphene oxide (GO), carbon nanotubes (CNT), and metal oxides (e.g., TiO₂, SiO₂), into biopolymer matrices have significantly improved performance, achieving oil/water separation efficiencies above 99.9 %. Polymer matrix nanocomposite membranes are widely used in membrane technology because of their practicality. Their primary components are environmentally friendly, energy-efficient, cost-effective, versatile, and practical. These membranes exhibit distinctive wettability properties, including superhydrophobicity/underwater superoleophilicity and superhydrophilicity/underwater superoleophobicity. Traits that enhance fouling resistance and selective wettability, leading to improved water rejection and oil permeation in water-in-oil emulsions, or, conversely, enhanced oil rejection and increased water permeation in oil-in-water emulsions. This review thoroughly examines the recent progress in nano-biocomposite membranes, focusing on their synthesis, performance, and environmental benefits. A Life Cycle Assessment (LCA) reveals that they produce less secondary pollution compared to synthetic membranes, underscoring their sustainability. Despite these advantages, challenges such as nanofiller aggregation, scalability, and cost persist. Future research should aim to optimize nanofiller dispersion, develop eco-friendly manufacturing processes, and conduct comprehensive LCAs to promote the industrial use of these membranes for sustainable oily wastewater treatment.