The objective of this paper is to discuss the potential of sodium alginate as a biopolymer in the formulation development and its allied applications. There is a growing trend in pharmaceutical in food industry to avoid the harsh condition in the preparation for administration to the body or for the storage purpose as it induce the side effects, instability or loss of therapeutic effect of the medicament. The sodium alginate is a versatile functional biomaterial for viscosity enhancement, stabilizer, matrixing agent, encapsulation polymer, bioadhesive and film former in transdermal and transmucosal drug delivery. The present article reviews sources, preparation, properties, crosslinking methodology, compendial standards, methods utilized for preparation of drug delivery systems using sodium alginate and its potential applications.