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Traditional cancer treatments such as chemotherapy and radiotherapy remain effective but lack specificity, often causing collateral damage to healthy tissues. Antibody-drug conjugates (ADCs) using monoclonal antibodies (mAbs) have been developed to achieve advanced targeted delivery; however, preclinical and pharmacokinetic studies have indicated that factors such as large size, complex conjugation processes, high production cost, and immunogenicity can limit tumor penetration, pharmacokinetics, and broader translational applicability. Nanobodies (Nbs), or single-domain antibodies (sdAbs) derived from camelid heavy-chain-only antibodies (HCAbs), represent a promising alternative with smaller size, high aqueous solubility, stability, refolding capacity, and low immunogenicity. Preclinical studies have shown that Nbs retain high affinity and specificity while providing improved access to hidden epitopes on target antigens compared to conventional antibodies. These unique features have supported the development of Nb-drug conjugates (NDCs), which have been evaluated for the selective delivery of cytotoxic drugs to antigen-expressing cancer cells in vitro and in animal models, demonstrating improved target specificity. Furthermore, Nb-attached drug delivery vehicles (NDvs) functionalized with nanoscale carriers, such as liposomes, dendrimer-based nanoparticles, upconversion nanoparticles, and polymeric micelles, have expanded the scope of Nb-based drug delivery systems. This review summarizes the current progress in Nb-mediated drug delivery, compares different strategies, and discusses their translational potential in cancer therapy, highlighting opportunities and limitations based on available experimental data.