The versatile natural polymer, collagen, has gained vast attention in biomedicine. Due to its biocompatibility, biodegradability, weak antigenicity, biomimetics and well-known safety profile, it is widely used as a drug, protein and gene carrier, and as a scaffold matrix in tissue engineering. Nanoparticles develop favorable chemical and physical properties such as increased drug half-life, improved hydrophobic drug solubility and controlled and targeted drug release. Their reduced toxicity, controllable characteristics of scaffolds and stimuli-responsive behavior make them suitable in regenerative medicine and tissue engineering. Collagen associates and absorbs nanoparticles leading to significant impacts on their biological functioning in any biofluid. This review will discuss collagen nanoparticle preparation methods and their applications and developments in drug delivery systems and tissue engineering.