Liposomes are spherical vesicles made of phospholipids that can encapsulate both hydrophilic and hydrophobic drugs. They improve drug delivery by protecting drugs, altering biodistribution and pharmacokinetics, and enabling targeted release. Liposomes can be modified with polymers or ligands to selectively deliver drugs to specific tissues or cells, prolong drug circulation time, and decrease side effects. Medical applications of liposomes include cancer and antimicrobial treatments, diagnostic imaging, and localized drug delivery to tumors or specific cells.