Cadmium and drought are the most destructive of the abiotic stresses with negative consequences in terms of impaired metabolism, restricted nutrient use efficiency and disruptive photosynthesis of plants. The present study investigated the mitigation strategy of both aforementioned stresses by the application of iron oxide (IONPs) and hydrogel nanoparticles (HGNPs) simultaneously probably for the first time. IONPs were biofabricated by using a locally identified Bacillus strain RNT1, while HGNPs were produced chemically followed by the confirmation and characterization of both NPs through nanomaterials characterization techniques. Results of FTIR and XRD showed the capping of NPs by different functional groups together with their crystalline structure, respectively. SEM and TEM analysis showed the spherical shape along with the particle size ranging from 18 to 94 nm of both NPs, while EDS analysis confirmed the elemental purity of NPs. The results revealed that IONPs-treated rice plants increased biomass, antioxidant enzyme contents, photosynthesis efficiency, nutrient acquisition together with the decrease in reactive oxygen species and acropetal Cd translocation under normal and drought stress conditions as compared with control plants. Furthermore, the expression of the Cd transporter genes, OsHMA2, OsHMA3 and OsLCT1 were curtailed in NPs-treated rice plants under normal and drought stress conditions. The overall significance of the study lies in devising the NPs-based solutions of increasing heavy metal pollution and water availability challenges being faced the farmers around the world.