In 2001, with The Laughing Club of India, she explored laughter based on yoga. Founder Dr. Madan Kararia spoke of the club's history and the growth of laughing clubs across the country, and subsequently the world. The documentary included testimonials from members of the laughter clubs who described how the practice had improved or changed their lives. Its featured segments included a group of workers in an electrical products factory in Bombay who took time off to laugh during their coffee break.
Nair went on to direct four more films before she produced one of her most notable films, Monsoon Wedding. Released in 2001, the film told the story of a Punjabi Indian wedding, written by Sabrina Dhawan. Employing a small crew and casting some of Nair's acquaintances and relatives, the film grossed over $30 million worldwide. The film was awarded the Golden Lion award at the Venice Film Festival, making Nair the first female recipient of the award.