Water pollution is an escalating global concern aggravated by rising industrialization, urbanization, agricultural run-off and natural causes. Conventional water treatment techniques often exhibit limitations in effectively and sustainably removing emerging contaminants such as heavy metals, pharmaceuticals, dyes, inorganic contaminants and pathogenic microorganisms. This review critically examines recent advancements in the use of clay nanoparticles and allied nanomaterials for water remediation. We discuss the structural and physicochemical properties of various clay minerals, synthesis and functionalization methods for clay-based nanocomposites, mechanisms underlying contaminant removal, performances in both laboratory and real-world applications, and highlight key challenges including scalability, stability, and environmental safety. Future research directions focus on green synthesis approaches, multifunctional composite materials, integration with smart monitoring technologies, and large-scale implementation strategies. Comprehensive tables summaries clay types, nanocomposite categories, and performance metrics for better understanding and enhanced clarity.