Liposomes are widely used as nanocarriers for targeted drug delivery, offering advantages such as biocompatibility, ability to carry large drug payloads, and tunable physicochemical properties. They improve drug stability, enhance biodistribution, and reduce systemic toxicity by protecting compounds from degradation and enabling targeted delivery to diseased tissues. However, clinical translation of liposome-based drug delivery has been slow despite promising preclinical results. Key challenges include immune recognition by the reticuloendothelial system (RES), opsonization, and complement activation-related pseudoallergy (CARPA), which can lead to rapid clearance and adverse immune responses. Sterically stabilized liposomes, with PEG coatings, improve circulation time but may reduce target specificity. Ligand-targeted liposomes enhance site-specific delivery by attaching targeting molecules to the liposome surface, though their clinical success has been limited by issues such as immune suppression and pharmacokinetic variability. The enhanced permeability and retention (EPR) effect allows liposomes to accumulate in tumors, but this is not universally applicable. The accelerated blood clearance (ABC) phenomenon, where repeated dosing of PEGylated liposomes leads to rapid clearance, poses a challenge for long-term treatment. CARPA, an acute hypersensitivity reaction, is a significant concern for liposomal therapies, requiring careful formulation and management. Despite these challenges, liposomal formulations have been approved for various cancers and other diseases, demonstrating their therapeutic potential. Continued research is needed to overcome these barriers, improve formulation stability, and ensure safe and effective clinical translation of liposomal drug delivery systems.Liposomes are widely used as nanocarriers for targeted drug delivery, offering advantages such as biocompatibility, ability to carry large drug payloads, and tunable physicochemical properties. They improve drug stability, enhance biodistribution, and reduce systemic toxicity by protecting compounds from degradation and enabling targeted delivery to diseased tissues. However, clinical translation of liposome-based drug delivery has been slow despite promising preclinical results. Key challenges include immune recognition by the reticuloendothelial system (RES), opsonization, and complement activation-related pseudoallergy (CARPA), which can lead to rapid clearance and adverse immune responses. Sterically stabilized liposomes, with PEG coatings, improve circulation time but may reduce target specificity. Ligand-targeted liposomes enhance site-specific delivery by attaching targeting molecules to the liposome surface, though their clinical success has been limited by issues such as immune suppression and pharmacokinetic variability. The enhanced permeability and retention (EPR) effect allows liposomes to accumulate in tumors, but this is not universally applicable. The accelerated blood clearance (ABC) phenomenon, where repeated dosing of PEGylated liposomes leads to rapid clearance, poses a challenge for long-term treatment. CARPA, an acute hypersensitivity reaction, is a significant concern for liposomal therapies, requiring careful formulation and management. Despite these challenges, liposomal formulations have been approved for various cancers and other diseases, demonstrating their therapeutic potential. Continued research is needed to overcome these barriers, improve formulation stability, and ensure safe and effective clinical translation of liposomal drug delivery systems.