Clay minerals are natural materials that show widespread applications in various branches of science, including environmental sciences, in particular the remediation of water contaminated with various water pollutants. Modified clays and minerals have attracted the attention of researchers in the recent past since the modified materials are seemingly more useful and efficient for removing emerging water contaminants. Therefore, modified engineered materials having multi-functionalities have received greater interest from researchers. The advanced clay-based materials are highly effective in the remediation of water contaminated with organic and inorganic contaminants, and these materials show enhanced selectivity towards the specific pollutants. The review inherently discusses various methods employed in the modification of clays and addresses the challenges in synthesizing the advanced engineered materials precursor to natural clay minerals. The changes in physical and chemical properties, as investigated by various characterization techniques before and after the modifications, are broadly explained. Further, the implications of these materials for the decontamination of waterbodies as contaminated with potential water pollutants are extensively discussed. Additionally, the insights involved in the removal of organic and inorganic pollutants are discussed in the review. Furthermore, the future perspectives and specific challenges in the scaling up of the treatment methods in technology development are included in this communication.