Clays have been used as early as 2500 BC in human civilization for medicinal purposes. The ease of availability, biocompatibility, and versatility of these unique charged 2D structures abundantly available in nature have enabled the extensive applications of clays in human history. Recent advances in the use of clays in nanostructures and as components of polymer clay nanocomposites have exponentially expanded the use of clays in medicine. This review covers the details of structures and biomedical applications of several common clays, including montmorillonite, LAPONITE®, kaolinite, and halloysite. Here we describe the applications of these clays in wound dressings as hemostatic agents in drug delivery of drugs for cancer and other diseases and tissue engineering. Also reviewed are recent experimental and modeling studies that elucidate the impact of clay structures on cellular processes and cell adhesion processes. Various mechanisms of clay-mediated bioactivity, including protein localization, modulation of cell adhesion, biomineralization, and the potential of clay nanoparticles to impact cell differentiation, are presented. We also review the current developments in understanding the impact of clays on cellular responses. This review also elucidates new emerging areas of use of nanoclays in osteogenesis and the development of models of bone metastasis of cancer.