Being the most abundant natural biopolymer on earth, cellulose has been vastly exploited in a range of applications, from writing paper to high-end biosensors. Natural cellulose fibers can be isolated from wood or non-woody plants such as hemp, jute, flax, and bamboo by chemical or mechanical treatments. To make it suitable for targeted applications, cellulose fibers are modified with functional moieties in the nanometer scale. Cellulose has been functionalized with noble metals such as silver and gold nanoparticles for catalysis and antimicrobial applications. A number of metal oxides, such as zinc oxide, titanium dioxide, and tin dioxide have been incorporated into cellulose. The porosity, hydrophilicity, and roughness of cellulose surface makes it an ideal substrate for a plethora of sensing applications. Further, it can be made into a lightweight, portable, foldable, and disposable device, which provides an excellent platform for various point-of-care purposes. Cellulose fibers have also been immobilized with carbon nanomaterials, including carbon nanotubes and graphene oxide. For optical applications, [Fe(hptrz)3](OTs)2 spin-crossover nanoparticles have also been immobilized on cellulose fibers. Likewise, many enzymes, macromolecules, and some polymers have been used to modify natural cellulose for specific end uses. This review focuses on recent developments in the modification or immobilization of functional materials on cellulose fibers, in macro-scale only, obtained from wood or plant sources.