In this paper, we aim to address the open questions raised in various recent papers regarding characterization of circulant graphs with three or four distinct eigenvalues in their spectra. Our focus is on providing characterizations and constructing classes of graphs falling under this specific category. We present a characterization of circulant graphs with prime number order and unitary Cayley graphs with arbitrary order, both of which possess spectra displaying three or four distinct eigenvalues. Various constructions of circulant graphs with composite orders are provided whose spectra consist of four distinct eigenvalues. These constructions primarily utilize specific subgraphs of circulant graphs that already possess two or three eigenvalues in their spectra, employing graph operations like the tensor product, the union, and the complement. Finally, we characterize the iterated line graphs of unitary Cayley graphs whose spectra contain three or four distinct eigenvalues, and we show their non-circulant nature.

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