Liposomes have been thoroughly investigated and are utilized for various illnesses for the past few decades starting from its first discovery in 1961. Since then, therapeutic efficiency of liposomes is enhanced by increasing drug absorbance while fast deterioration and adverse effects are avoided or minimized. This will extend the biological halfway life. Liposomes are more attractive for usage as drug delivery carriers with all of these characteristics and versatility to modify their surface to create additional specific functionalities. In various phases of research, there are numerous new liposomal compositions that improve the therapeutic efficiency of new and old medicines used in pre-clinical and clinical studies. Current multimodal imaging advances aimed at better diagnosing and monitoring liposome therapies as diagnostic tools. Liposomes are major possibilities for medication delivery improvement. Recent researches show that the liposomes can be taken widely in cancer treatments. The primary properties of these structures include minimal toxicity, cytocompatibility, reduced clearance rates, tissue targeting and sustained drug release. Liposomes offer a variety of benefits as shown by approval of Doxil, as compared to traditional chemotherapy with free medication treatment. There are a multitude of liposomes depending on their size, lamellar number, shape and composition. Diagnostic, therapeutic, improved vaccination are covered by clinical use of these systems. Drug and gene delivery are two therapeutic aspects, where due to their unique characteristics liposomes might be beneficial. Several illnesses have been examined with respect to the participation of liposomes, with some good results. Cancer is a life-threatening disease. These structures have been examined in this respect, both in imaging and in chemotherapy. These investigations have resulted in different liposome compositions in different clinical stages. We take this great opportunity to present various surface functionalization strategies and bio-applications of liposomes developed during the last two decades covering the notable work published from 2011 to 2021 in this review. In addition, we provide opinions on the liposome industry, its commercial market and the prospective developments in the field of liposome technology. It is anticipated that this review will serve as a valuable resource, fostering interest and engagement among scientists worldwide in the field of liposome research.