The development of nonlinear optical (NLO) materials has been driven by a multitude of important technological applications that can be realized if suitable materials are available 1–15. Future generations of optoelectronic devices for telecommunications, information storage, optical switching, and signal processing are predicted to a large degree on the development of materials with exceptional NLO responses 1–15. A large number of organic π-conjugated molecules have been investigated in the last thirty years for suitability to function as components in hypothetical NLO materials 1–19. Several books and reviews have appeared dealing with theory of nonlinear optics and the structural characteristics and applications of nonlinear optical molecules and materials 1–19. Truly, all-optical NLO effects were not discovered until the discovery of lasers. Second-harmonic generation (SHG) was first observed in a single crystal of quartz by Franken et.al. 20 in 1961. Parametric amplification was observed in lithium niobate (LiNbO3) by two-wave mixing in temperature-tuned single crystals 21. Rentzepis and Pao 22 made the first observation of SHG in an organic material, benzpyrene, in 1964. Heilmeir examined hexamethylenetetramine single crystal SHG in the same year 24. Two other organic materials followed rapidly: hippuric acid and benzil 25. Benzil was the first material that proved relatively easy to grow into large single crystals. Over the last two decades the study of nonlinear optical process in organic and polymer systems has enjoyed rapid and sustained growth 1–19, 25–39. One indication of the growth is the increase in the number of articles published in refereed society journals, as one can find from web of science 25, SCIFINDER 26 and Scopus 27 search. The four years period 1980–1983 saw the publication of 124 such articles. In the next four years period 1984–1987, the production of articles increased to 736 (nearly six times). From 1988–1992, the number of articles increased to more than 4000 25–27. In the last decade, academia, industry and government laboratories have been working in this field to replace electronics by photonics and as a result, the number of publications has reached more than 70,000 25–27. The rapid growth of the field is mainly due to the technological promise of these materials 1–19, 28–37. Traditionally, the materials used to measure second-order NLO behavior were inorganic crystals, such as lithium niobate (LiNbO3) and potassium dihydrogen phosphate (KDP). The optical nonlinearity in these materials is to a large extent caused by the nuclear displacement in an applied electric field, and to a smaller extent by the movement of the electrons 1–10. This limits the bandwidth of the modulator. Organic materials have a number of advantages over inorganic materials for NLO applications 28–35. The ease of modification of organic molecular structures makes it possible to synthesize tailor-made molecules and to fine-tune the properties for the desired application 28–35. Unfortunately, not all organic materials display second-order NLO properties. At the molecular level, they need to be non-centrosymmetric. A large number of organic π-conjugated molecules have been investigated 1–9, 28–35 in the last twenty years. The outcome of the results has helped to establish certain guidelines for molecular design to get good second order NLO materials. However, roughly more than 80% of all π-conjugated organic molecules crystallize in centro-symmetric space groups 1–19, therefore producing materials with no second order bulk susceptibility. To overcome this limitation, organic NLO material doped or covalently attached in polymers, have been introduced by Dalton et. al 5,6,16,38–39. A few of these chromophores have served as components of functioning polymer-based optoelectronic devices; the physical properties of all these prototype materials possess one or more critical deficiencies that render commercialization of these systems impractical 28–39. These facts suggest that new types of molecular design are necessary if significant advances are to be realized. From 1998 onwards, researchers started effort on developing various nanomaterials, with high second order NLO properties and seeking for their applications in photonics as well as chemical and biological detection 40–106. The surface-enhanced phenomenon is predicted to have a particularly important impact in nonlinear optical NLO applications, since the generally weak nonlinear effects can be significantly increased via strong electromagnetic fields at the surfaces of metallic nanostructures 60–129. NLO based sensing have provided great potentials and opportunities for detecting different environmental toxins that exhibit some specific advantages, compared to other conventional and nanomaterial based techniques. Aim of this review is mainly to summarize and evaluate the achievements in development of nanoparticle based second order NLO materials with different sizes and shapes and it will focus on the following three major issues: (i) design of novel NLO active materials using nanoparticles (ii) nonlinear optical properties of single nanoparticle, nanoparticle aggregates and self assembly, and (iii) applications in chemical and biological sensing.