This thing blows, it'll shred anything standing nearby.
— Bill's insight on his invention.
The Nail Bomb resembles a tin can with protruding sharp objects (blades or other shrapnel). Nail Bombs are essentially land mines which only activate when an enemy is nearby. The damage done by Nail Bombs is enough to finish off all enemies in the game (except a Bloater) in one explosion. They are made from blades and gunpowder found throughout the game. This bomb can be first found in Bill's Town. Once Bill gives you your first Nail Bomb, you are then able to craft these on your own.
Manuals found later in the game will increase the Nail Bomb's area of effect.
Ellie can also craft Nail Bombs, albeit slower than Joel. Nail bombs are also found as trip-wired traps scattered throughout the various cities the characters venture through, notably in Lincoln (developed by Bill and Pittsburgh (made by the Hunters).
In Factions MP, Nail Bombs require a blade, explosive and sugar. The bombs can be used in two ways; the player can throw the bomb like a grenade, and it will explode regardless if an enemy was near the bomb or not; or alternatively it can be placed like a land mine, exploding if an enemy player stands near it or shoots it. Nail Bombs that have been placed can be marked, just like enemy players.
If used like a grenade, when it comes close to an enemy player's screen, there will be the warning that a Nail Bomb is coming towards them. Upon landing, the Nail Bomb takes about two seconds to explode. This delay can be shorted by the use of Bomb Expert or by ensuring the bomb hits something before the floor since the timer starts as soon as it makes contact with anything.
Upon being used as a trap, the Nail Bomb will release a white fog around it to warn of its presence and make it more noticeable. Also, if thrown or dropped on an incline, the Nail Bomb will rapidly roll downhill. One can mark the foe's 'trap' Nail Bombs by aiming at it and pressing R3. This will engulf the Nail Bomb in a red aura that only the player and their teammates can see and the mark will resemble Hawk-Eyed 2; the bomb will glow through walls instead of just having a arrow pointing out its general direction, however, parts won't be gained for marking bombs.
In some ways, Nail Bombs are more powerful than Molotovs; whereas a fully armored opponent can survive a direct impact from a Molotov, nail bombs can reliably down even armored enemies. It is possible to be executed by a Bomb even when not in the down state. This could happen by having low health, or standing directly in front of a Nail Bomb. Having two bombs detonate in close proximity next to a target guarantees an instant execution.
Bombs can be shot out of the air after they are thrown, although this is very difficult to do.
- It can be used as "mine" or "grenade", allowing a player to adapt to different scenarios.
- It has a decent range; even if out of the main radius, the foe will be still damaged.
- Like the Molotov, if the foe is within the central blast radius (very close to the bomb) they will be downed and executed altogether; unless they have armor, those victims will have less chance of being downed but still, will most likely be downed.
- The enemy can set off the player's own team's Nail Bomb by shooting at it, causing the Bomb to explode and kill anyone within its radius, so it can be a potential backfire. However, this can work in the players favour as well, as they can shoot enemy's Nail Bombs.
- Bombs, when deployed as mines, can be heard and marked; typically flashing when placed on the radar, alerting players to their presence.
- The nailbomb was first introduced in the story trailer shown being used by Joel in a cut battle scenario. 
- The nailbomb can glitch and disappear if thrown between piles of junk.