A recurring challenge in the field of nanocomposites is to control the spatial distribution of nanoparticles (NPs) in a polymer matrix. This issue is of critical importance since it is now well established that a specific NP dispersion state is necessary to optimize a desired property of polymer nanocomposites (PNCs). This Perspective focuses on one particular approach to controlling NP spatial dispersion, and hence the properties of polymer based nanocomposites: the use of polymer grafted NPs. Novel developments over the past decade in synthesis techniques allow us to controllably functionalize NPs with polymer chains. This has ignited considerable interest in this field, leading to significant advances in creating nanocomposites with tunable physical properties. We begin by briefly outlining the various synthetic strategies for functionalizing NPs and then discuss various methods for controllably dispersing them in a polymer matrix. The consequences of having states with controlled NP dispersion on nanocomposite properties, primarily the mechanical and optical properties, will then be discussed. In every section of this Perspective, we have an explicit discussion of unresolved issues and critical questions which need to be addressed for continuing progress, especially as it relates to current and potential applications of this class of materials.