Nanomaterials, especially nanofibers, hold considerable promise as drug delivery systems (DDS) by providing targeted administration of drugs due to their unique properties, such as large surface area, high porosity, and mechanical robustness. Nanofibers can be fabricated using various techniques like electrospinning, self-assembly, phase separation, and template synthesis, offering properties such as adjustable size, shape, high precision, and biodegradability. Additionally, features such as multiple target functionalization, controlled release of the drug, and prolonged circulation of the drug make nanofibers particularly suitable for biomedical applications, including drug delivery, tissue regeneration, and biosensing. This comprehensive review explores the characteristics, types, fabrication methods, and applications of nanofibers. Diverse types of polymer nanofibers are used in drug delivery, such as blended nanofibers, core-shell nanofibers, and layer-by-layer assembly, each demonstrating their own advantages in controlled drug release and targeted therapy. Electrospun nanofibers are extensively utilized in biomedical applications due to their superior mechanical performance and high porosity and advancements in coaxial electrospinning enabling the fabrication of core-shell nanofibers, offering controlled drug release kinetics and protection of loaded molecules. These nanofibers demonstrate enhanced bioactivity and biocompatibility and can find application in tissue engineering. Furthermore, this review addresses the challenges associated with nanofiber production, including reproducibility and scalability. Nanofibers exhibit the potential to revolutionize medical treatment across diverse therapeutic areas. Future research directions and challenges in nanofiber-based drug delivery discussed in this review offer guidance for further advancements in this rapidly evolving field.