Abstract: Self-assembled nanocomposite thin films couple two materials into a single film, typically, in the form of vertically aligned nanopillars embedded in a matrix film. High-density vertical heterointerfaces provide a great platform for engineering new physical properties and novel multifunctionalities, as well as for nanoscale device integration. Tremendous research efforts have been devoted to developing different nanocomposite systems. In this article, we summarize recent progress on vertically aligned nanocomposite thin films for enhanced functionalities such as ferroelectricity, tunable magnetoresistance, multiferroicity, dielectricity, magnetic anisotropy, perpendicular exchange bias, novel electrical/ionic properties, interfacial conduction, and resistive switching. Using specific examples, we discuss how and why the fundamental physical properties can be significantly tuned/improved in vertically aligned nanocomposites. Finally, we propose future research directions to achieve further enhanced performance as well as practical devices.