The pharmaceutically useful cyclodextrins (CyDs) are classified into hydrophilic, hydrophobic, and ionic derivatives. Because of the multi-functional characteristics and bioadaptability, these CyDs are capable of alleviating the undesirable properties of drug molecules through the formation of inclusion complexes or the form of CyD/drug conjugates. This review outlines the current application of CyDs in design and evaluation of CyD-based drug formulation, focusing on their ability to enhance the drug absorption across biological barriers, the ability to control the rate and time profiles of drug release, and the ability to deliver a drug to a targeted site.