Over the past few decades, the disposal of various industrial pollutants such as organic dyes, heavy metal ions, pesticides, and phenolic compounds has led to the deterioration of the quality of freshwater; even with the 70% water coverage over the earth, there is meager access to freshwater sources. Against the drawbacks of conventional water purification methods such as sludge production and generation of toxic byproducts, the adsorption process is regarded as an efficient and economical strategy for the treatment of wastewater. Among various available adsorbents, cyclodextrin-based nanosponges have evolved as prominent adsorbents for treating wastewater and are considered a cost-effective option with minimal energy and time requirements. Owing to their porous nature, cone-like structure, cross-linked three-dimensional network, and special architecture of the hydrophilic and hydrophobic moieties wherein the hydrophobic core can form inclusion complexes with pollutants via host−guest interactions while hydrophilic edges interact with pollutants through hydrogen-bonding and electrostatic interactions, they are effective adsorbents for the removal of a variety of pollutants such as heavy metals, organic dyes, phenols, and pesticides. Additionally, the number of active sites in these nanosponges could be enhanced by hybridizing with other adsorbents or by functionalization with magnetic nanoparticles. This review deliberates various water purification methods and underlines the limitations of using other conventional methods over adsorption. The strategies to synthesize β-cyclodextrin-based nanosponges deploying various cross-linkers and their further modifications have been discussed in detail. Finally, the application of these nanosponges for the effective removal of assorted pollutants from wastewater highlighting the adsorption mechanism in certain cases is cogitated.