Botulinum toxin A (BoNT-A) intravesical injections have been used to treat patients with refractory functional bladder disorders such as overactive bladder (OAB) and interstitial cystitis/bladder pain syndrome (IC/BPS), but the risk of adverse events and the need for repeated injections continue to prevent widespread application of this treatment. Liposomes are vesicles that comprise concentric phospholipid layers and an aqueous core; their flexible compositions enable them to adsorb and fuse with cell membranes and to deliver drugs or proteins into cells. Therefore, liposomes have been considered as promising vehicles for the less invasive delivery of BoNT-A. In previous placebo-controlled trials including patients with OAB refractory to medical treatment, it was shown that liposomal BoNT-A could significantly decrease the frequency and urgency of urination. In patients with IC/BPS, it was shown that liposomal BoNT-A could also improve bladder pain, but the therapeutic efficacy was not superior to that of the placebo. As the therapeutic mechanisms of BoNT-A include the decreased expression of nerve growth factors, P2X3 receptors, and vanilloid receptors on C-fibers, liposomal BoNT-A might play a more promising role in the treatment of bladder oversensitivity. This article features the contemporary literature regarding BoNT-A, liposomes, and liposomal BoNT-A treatment for functional bladder disorders and potential clinical applications in the future.