Microfluidic technology has been highly useful in nanovolume sample preparation, separation, synthesis, purification, detection and assay, which are advantageous in drug development. This review highlights the recent developments and trends in microfluidic applications in two areas of drug development. First, we focus on how microfluidics has been developed as a facile tool for the fabrication of drug carriers including microparticles and nanoparticles. Second, we discuss how microfluidic chips could be used as an independent platform or integrated with other technologies in drug toxicity screening. Challenges and future perspectives of microfluidic applications in drug development have also been provided considering the present technological limitations.