Xanthan gum is a high molecular weight natural polysaccharide produced by fermentation process. It consists of 1, 4-linked β-D-glucose residues, having a trisaccharide side chain attached to alternate D-glucosyl residues. Although the gum has many properties desirable for drug delivery, its practical use is mainly confined to the unmodified forms due to slow dissolution and substantial swelling in biological fluids. Xanthan gum has been chemically modified by conventional chemical methods like carboxymethylation, and grafting such as free radical, microwave-assisted, chemoenzymatic and plasma assisted chemical grafting to alter physicochemical properties for a wide spectrum of biological applications. This article reviews various techniques utilized for modification of xanthan gum and its applications in a range of drug delivery systems.