β-cyclodextrin (β-CD) and other cyclodextrins (CDs) have utility for solubilizing and stabilizing drugs; however, some are nephrotoxic when administered parenterally. A number of workers have attempted to identify, prepare, and evaluate various CD derivatives with superior inclusion complexation and maximal in vivo safety for various biomedical uses. A systematic study led to SBE-β-CD (Captisol), a polyanionic variably substituted sulfobutyl ether of β-CD, as a non-nephrotoxic derivative and HP-β-CD, a modified CD developed by Janssen. SBE-β-CD and HP-β-CD have undergone extensive safety studies and are currently used in six products approved by the Food and Drug Administration (four for Captisol and two for HP-β-CD). They are also in use in numerous clinical and preclinical studies. This article will focus on the issues that led to the development of these two CDs, their safety, characterization, and applications, and especially their ability to improve drug delivery. SBE-β-CD interacts very well with neutral drugs to facilitate solubility and chemical stability, and because of its polyanionic nature, it interacts particularly well with cationic drugs. Complexes between SBE-β-CD and HP-β-CD and various drugs have been shown to rapidly dissociate after parenteral drug administration, to have no tissue-irritating effects after intramuscular dosing, and to result in superior oral bioavailability of poorly water-soluble drugs. The pharmacokinetics, tissue distribution, and cellular effects of some representative CDs, including SBE-β-CD and HP-β-CD, are reviewed. The safety profiles of CDs are discussed, with emphasis on the biological effects of some CDs on the gastrointestinal tract, kidney, and reproduction and development and the carcinogenic potential of CDs. In addition, human experience with CD derivatives, specifically SBE-β-CD and HP-β-CD, indicates that these two CDs are well tolerated in humans and have no adverse effects on the kidneys or other organs following either oral or intravenous administration.