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Cyclodextrins (CDs) offer a very broad spectrum of applications in diverse fields of drug delivery. They are a family of cyclic α-(1–4)-linked oligosaccharides of α-d-glucopyranose subunits forming a more hydrophobic central cavity and a hydrophilic outer shell. CDs bear cage like supramolecular structures, similar to calixarenes, cyclophanes and crown ethers. No covalent bonds are required to host a guest molecule in the central cavity. The aim of this review is to throw light on some of the applications and formulation techniques for the novel multifunctional CD based nanocarriers used in diverse areas of drug delivery. Furthermore, this article highlights the molecular structure, chemical, complexation properties and the use of CDs in nanosystems like liposomes, magnetic nanoparticles, biodegradable polymers, micro and nanospheres and capsules.