A method is provided for making “smart” paper and “smart” microfibers by means of nanotechnology layer-by-layer techniques. The method comprises forming an aqueous pulp of lignocellulose fibers and nanocoating it by alternatively adsorbing onto the fibers multiple consecutively-applied layers of organized ultra thin and oppositely-charged polyelectrolytes, at least one of which is an electrically conductive polymer or nanoparticle (or a magnetically active polymer or nanoparticle, or an optically active polymer or nanoparticle), and another one of which has a charge opposite of said electrically conductive polymer or nanoparticle (or magnetically active polymer or nanoparticle, or optically active polymer or nanoparticle), thereby making a modified aqueous pulp of electrically conductive (or magnetically active, or optically active) multi-layer nanocoated lignocellulose fibers; then draining the water out of the modified aqueous pulp to form sheets of smart microfibers. A finished paper is manufactured by drying the sheets of the nanocoated multi-layer fibers and processing the dried sheets to make a smart paper having enhanced electrical conductivity, magnetic and/or optical properties.