Liposomes are phospholipid-based vesicular systems capable of encapsulating both hydrophilic and lipophilic drugs. Since their discovery by Alec D. Bangham in 1961, they have become an important platform in drug delivery due to their biocompatibility, ability to modify pharmacokinetics, and potential to reduce toxicity. This review summarizes the structure, mechanism of action, classification, preparation methods, and evaluation parameters of liposomes. It also discusses their pharmaceutical application, marketed formulations, limitations, and recent developments of various types of novel liposomes. Liposomes continue to offer significant potential for improving therapeutic effectiveness across multiple routes of administration