<p>Magnesium alloys are utilized in the aerospace, automobile, electronics, and biomedical sectors for their exceptional strength-to-weight ratio and biological compatibility. However, their applications have been restricted by the poor corrosion resistance. Sol-gel coatings on the magnesium alloys offer good corrosion protection, excellent adhesion, and low-temperature processing. However, structural defects reduce the long-term corrosion protection of these coatings. Recent advancements focus on developing smart sol-gel coatings containing nanocarriers that respond to environmental stimuli. Various nanomaterials have been used to design the smart sol-gel coatings on magnesium alloys. Among nanoclays, MMTs have been used as a nanocarrier for Ce³⁺-Zr⁴⁺ ions. Also, the HNTs have been used as nanocarriers for Ce³⁺-Zr⁴⁺, Pr³⁺, and 8-hydroxyquinoline. HNTs have also been used to develop the sol-gel films with dual self-reporting and self-healing capability. Phenolphthalein-loaded HNTs showed both self-reporting and self-healing functionalities by responding to pH changes. Also, fluorescein and 8-hydroxyquinoline-loaded HNTs exhibited self-reporting capabilities through fluorescence emission in response to pH and Mg²⁺ concentration changes, respectively. Among carbon nanomaterials, fullerene C₆₀ has been used to control the pH-dependent release of sodium dodecyl sulfate within a sol-gel coating. Also, GO has been utilized to develop a self-healing sol-gel coating using 8-hydroxyquinoline as a corrosion inhibitor. The suitable dispersion behavior and encapsulation capacity of CNTs have raised hopes for their use in the smart sol-gel systems. Also, carbon quantum dots exhibit a high capacity for designing sol-gel coatings with self-reporting and self-healing capabilities. Additionally, a pH-responsive coating using phytic acid-loaded PCL microcapsules was designed for Mg alloy. Moreover, a dual-layer smart coating is developed by combining a Flash Plasma Electrolytic Oxidation underlayer with a Ce-based sol-gel topcoat. Smart sol-gel coatings show strong potential to strengthen corrosion resistance of the Mg-based substrates, addressing poor corrosion resistance that has limited their broader industrial use across multiple sectors.</p>