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Bacillus Calmette–Guérin (BCG) immunotherapy has been a cornerstone treatment for non-muscle-invasive bladder cancer for decades and still faces challenges, such as severe immune adverse reactions, which reduce its use as a first-line treatment. This review examines BCG therapy’s history, mechanisms, and current status, highlighting how nanotechnology and bioengineering are revitalizing its application. We discuss novel nanocarrier systems aimed at enhancing BCG’s efficacy while mitigating specific side effects. These approaches promise improved tumor targeting, better drug loading, and an enhanced stimulation of anti-tumor immune responses. Key strategies involve using materials such as liposomes, polymers, and magnetic particles to encapsulate BCG or functional BCG cell wall components. Additionally, co-delivering BCG with chemotherapeutics enhances drug targeting and tumor-killing effects while reducing drug toxicity, with some studies even achieving synergistic effects. While most studies remain experimental, this research direction offers hope for overcoming BCG’s limitations and advancing bladder cancer immunotherapy. Further elucidation of BCG’s mechanisms and rigorous safety evaluations of new delivery systems will be crucial for translating these innovations into clinical practice.