Food packaging is an important concept for consumer satisfaction and the increased shelf life of food products. The introduction of novel food packaging materials has become an emerging trend in recent years, which could be mainly due to environmental pollution caused by plastic packaging and to reduce food waste. Recently, numerous studies have been carried out on nanoclays or nanolayered silicate to be used in packaging material development as reinforcing filler composites. Different types of nanoclays have been used as food packaging materials, while montmorillonite (MMT), halloysite, bentonite (BT), Cloisite, and organically modified nanoclays have become of great interest. The incorporation of nanoclays into the packaging matrix improves the mechanical and barrier properties and at the same time prolongs the biodegradation of the packaging material. The purpose of this article is to examine the development of nanoclay-based food packaging materials. The review article highlights the current state of research on bio-based polymers with nanoclay for food packaging. In addition, the report analyses the mechanical, barrier, and antibacterial characteristics of nanoclay-based food packaging materials. Finally, it discusses the migration of nanoclays, toxicity levels, and the legislation associated with the application of nanoclays.