The vast deposits of Nigerian bentonite clay have many significant uses in different aspects of industrial fields of which the oil and gas industry is a potential consumer of this clay mineral. In this review article, the key mineralogical characteristics and rheological properties of these clay deposits in various locations and their related application for drilling mud formulation were comprehensively reviewed. Various research efforts on these bentonite clay deposits over the past couple of years were summarized with some critical comments and analysis. Attention was given to the clay reserve estimates, mineralogy of the clay deposits, chemical modification of the clays, rheological properties of drilling mud formulated from these clays and its suitability for drilling operations. Moreover, future prospects and key problems to be solved regarding the use of Nigerian bentonite deposits for drilling mud formulation were discussed. This review shed new light on both fundamental and practical studies that are concentrated on the use of Nigerian bentonite for drilling mud formulation.