Cellulose is one of abundant renewable biomaterials in the world. Over 1.5 trillion tons of cellulose is produced per year in nature by biosynthesis, forming microfibrils which in turn aggregate to form cellulose fibers. Using new effective methods these microfibrils can be disintegrated from the fibers to nanosized materials, so called cellulose nanocrystal (CNC) and cellulose nanofiber (CNF). The CNC and CNF have extremely good strength properties, dimensional stability, thermal stability and good optical properties on top of their renewable behavior, which can be a building block of new materials. This paper represents recent advancement of cellulose nanocrystals and cellulose nanofibers, followed by their possibility for smart materials. Natural behaviors, extraction, modification of cellulose nanocrystals and fibers are explained and their synthesis with nanomaterials is introduced, which is necessary to meet the technological requirements for smart materials. Also, its challenges are addressed.