Nanomaterials have demonstrated substantial promise in the diagnosis and treatment of neurological and psychiatric disorders, offering novel strategies to overcome the limitations of traditional therapies. This review utilizes bibliometric analysis to evaluate global trends in nanomaterial research for neurological and psychiatric diseases, based on a corpus of 3,987 publications retrieved from the Web of Science Core Collection spanning from 1997 to August 2025. The analysis reveals a consistent upward trajectory in annual publications, reflecting substantial and growing international interest across diverse regions. Following an overview of global research dynamics, this review explores the pathogenesis of neurological and psychiatric disorders, such as Alzheimer's disease, Parkinson's disease, depression, and schizophrenia. The mechanisms underlying these conditions, including neuroinflammation, oxidative stress, protein aggregation, and neurotransmitter imbalances, are systematically discussed. Subsequently, the review focuses on how nanomaterials, including nanoparticles, nanocomposites, and nanocarriers, target these pathogenic mechanisms. The therapeutic applications of nanomaterials are evaluated with respect to their ability to modulate neuroinflammation, reduce oxidative stress, improve drug delivery to the brain, and facilitate the repair of neuronal damage. Despite the promising potential of nanomaterials, several challenges remain, including biocompatibility, targeted delivery, and scalability of treatment options. The review concludes by highlighting future directions for research, emphasizing the need for continued innovation in nanomaterial design and application to address these challenges and advance clinical treatments for neurological and psychiatric disorders.