Functionally graded nanocomposite materials (FGNMs) have been known since the 1980s, although nanocomposite materials date back to the space race era of the 1960s. FGNMs are defined as materials in which the chemical and structural composition changes over their entire volume. Today, due to our current understanding, technology, and control over the nanostructure of materials, we can tune these properties at the nanoscale. Although FGNM applications have mostly focused on protective coatings, they have performed well in catalysis and hydrogen production applications. In this article, FGNMs are presented in a new light beyond their well-established applicability as protective coatings. This article focuses on the synergistic potential among mechanical/tribological properties and competitive catalytic performance, with special emphasis on energy and remediation applications. Also, ways by which the rational design and tailoring of catalytic properties can be achieved by means of FGNMs are described.