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The purpose of this review is to discuss and summarize some of the interesting findings and applications of cyclodextrins (CDs) and their derivatives in different areas of drug delivery, particularly in protein and peptide drug delivery and gene delivery. The article highlights important CD applications in the design of various novel delivery systems like liposomes, microspheres, microcapsules, and nanoparticles. In addition to their well-known effects on drug solubility and dissolution, bioavailability, safety, and stability, their use as excipients in drug formulation are also discussed in this article. The article also focuses on various factors influencing inclusion complex formation because an understanding of the same is necessary for proper handling of these versatile materials. Some important considerations in selecting CDs in drug formulation such as their commercial availability, regulatory status, and patent status are also summarized. CDs, because of their continuing ability to find several novel applications in drug delivery, are expected to solve many problems associated with the delivery of different novel drugs through different delivery routes.