Nanocellulose, a versatile nanomaterial with remarkable properties, has gained significant attention for its potential in various industries, including healthcare, packaging, and materials science. In recent years, microbial factories have emerged as a sustainable and efficient source of nanocellulose. Nanobiocellulose refers to a nanoscale form of cellulose produced through biological processes, primarily by bacteria or other microorganisms. Nanobiocellulose is characterized by its nanoscale fibril structure, high aspect ratio, and unique physical and chemical properties, making it an increasingly valuable nanomaterial with diverse applications. This review explores the sustainable production through various microbial strains, cultivation methods, and bioprocess optimization strategies. It also explores advanced characterization techniques for nanocellulose, encompassing microscopy, spectroscopy, mechanical testing, thermal analysis, and barrier properties assessment. The applications of sustainable bacterial nanocellulose are also explored comprehensively alongwith challenges pertaining to sustainability, productivity, and other emerging trends.