Solid tumors such as breast cancer have historically provided many challenges to anti-cancer therapy. Therapeutic hurdles to drug penetration in solid tumors include heterogeneous vascular supply and high interstitial pressures within tumor tissue, particularly in necrotic zones, lower pH and presence of leaky vasculature leading to reduced therapeutic response. Liposome based drug delivery systems offer the potential to enhance the therapeutic index of anti-cancer agents, either by increasing the drug concentration in tumor cells and/or by decreasing the exposure in normal tissues exploiting enhanced permeability and retention effect phenomenon and by utilizing targeting strategies. This review discusses recent trends in liposome-based drug delivery system both for diagnosis and treatment of breast cancer.