Nanotechnology has found widespread applications in our everyday lives, including areas such as water purification, sensor technology, advanced materials, biomedicine, drug delivery, and bioimaging. Conventional methods to synthesize nanoparticles (NPs) often involve expensive equipment, high temperatures and pressures, and hazardous chemicals, leading to environmentally harmful waste. Lately, plasma-assisted methods have emerged as possible replacements for the conventional schemes because of being straightforward and environment friendly. In particular, microplasma (plasma characterized by its small dimensions on the microscale and its high electron energy density) has been the most active domain for research in NP synthesis. Utilizing microplasma under atmospheric pressure opens avenues to enhance the production of functional materials, especially those sensitive to temperature. This review examines the importance and potential future developments of microplasma-based nanomaterial production technology. The discussion highlights the distinctive features of microplasma-based synthesis compared with conventional methods, emphasizing its potential to revolutionize the field of synthesis of NPs of different sizes, shapes and compositions and also the opportunities for advancing the production of functional materials for various applications.