Nanomaterials have become centre point of attraction in research because of their potential application in the field of drug delivery system. Nanoclays are the natural nanomaterials composed of phyllosilicates with nanopores. Nanoclays can be categorized into four main groups as the kaolinite group (zeolite or halloysite), the montmorillonite or smectite group, the illite group, and the chlorite group. Nanoclays can also be synthesized under proper hydrothermal conditions. Nanoclay with intercalation of quaternary ammonium cations is known as organoclays and is used as rheological modifiers. Nanoclay has layered structure which allows it to swell or shrink liquids accumulate or are removed from the layers. Layered structure, chemical stability, mechanical and thermal strength, gas-barrier properties, low cost and eco-friendly character has broadened the area of application of nanoclays in the field of drug delivery system. Chemical modification through intercalation of ions, surface modification and formation of clay-based nanocomposites enhance their utility to greater extent. This review will focus on the various applications of nanoclays and clay-based nanocomposites in drug delivery system.