Cells release into the extracellular environment diverse types of membrane vesicles of endosomal and plasma membrane origin called exosomes and microvesicles, respectively. These extracellular vesicles (EVs) represent an important mode of intercellular communication by serving as vehicles for transfer between cells of membrane and cytosolic proteins, lipids, and RNA. Deficiencies in our knowledge of the molecular mechanisms for EV formation and lack of methods to interfere with the packaging of cargo or with vesicle release, however, still hamper identification of their physiological relevance in vivo. In this review, we focus on the characterization of EVs and on currently proposed mechanisms for their formation, targeting, and function.