Liposomes are the artificially formulated spherical vesicles which are composed of lipid bilayer having encapsulation ability of both hydrophilic and lipophilic drugs in order to prevent them from degradation. The controlled and targeted release ability of liposomes makes them a unique drug delivery system. Liposomes are combination of phospholipids in an aqueous media resulting in bilayered structures. Liposomes can be characterized by various methods. Liposomes can be used in controlling and targeting drug delivery system. Liposomes have various therapeutic application including cancer, ocular, infectious diseases and also various applications in diagnostics, industrial and gene therapy. With the advancement of science and technology, liposomes will have a remarkable future in the pharmaceutical market.