The twenty-first century witnessed the emergence of renewable resources—the application of composites in aerospace industry enhanced with carbon, glass, kevlar, etc. However, these materials are not biodegradable and environment-friendly. To solve this issue, studies were being carried out on natural composites which are biodegradable. The intent of this study is to present a comprehensive review of the biodegradable composites and matrix materials used in the aerospace industry. Since an aerospace vehicle has to operate under critical weather conditions at variable altitudes, the main problems with the existing materials are related to crash resistance, crack propagation rate growth, self-healing properties, and mechanical properties along with the additional problem of environmental pollution. The alternatives to synthetic fibers, thermoplastics, and thermosetting resins are biopolymers, natural fibers and natural fiber nanocomposites (NFNCs). NFNCs are already implemented in the automotive and aerospace industry because of their biodegradability. However, the type of reinforcement can predominantly alter the dynamic behavior of natural cellulose fiber—nanoparticle-embedded composites (NFNRCs). Similarly, the reinforcement surface-area-to-volume ratio is a key parameter for aerospace applications. Based on the type of reinforcement, nanofiller-based natural composites can display various effective enhancements in desirable properties (like an impact tolerance, fatigue strength, tensile and flexural strength), rheological properties, electrical conductive properties, optical properties, enhanced material durability, energy absorption rate, and shock/impact resistance that make these materials crucial for aerospace application. Based on this, a comprehensive study has been studied on NFNRCs.