The practice of multifunctional excipients is gaining more and more attention as it simplifies the process of drug formulation by substituting the necessity of using mixture of many excipients. The multifunctional excipients are the class of excipients which includes pre-–processed and co-processed excipients and it provides added functionalities to the formulation. Functionality of an excipient is a useful property which helps in manufacturing and improves quality as well as applicability of the material. Researchers have identified that single component excipients may not always give the required results during development and manufacturing of definite API, hence they are concentrating to develop multifunctional excipients which will have improved quality that will fulfil the requirements of the formulation experts in terms of cost. The cost of new excipient development is very high as it demands toxicity studies, hence the industry is now focusing on co-processing of approved materials. The demand for directly compressible co-processed excipients has also increased due to the availability of high-speed tableting machines, time saving in Abbreviated New Drug Application (ANDA), simplified validation and stability of active ingredients. The intention of this review article is to highlight applicability and increasing attention focusing the benefits of co-processed excipients. Their advantages over conventional blend of excipients include development methods, testing and also highlighting their regulatory consideration.