Liposomes are vesicles consisting of spherical phospholipid bi-layers with specific properties making them useful for topical application of drugs. Liposome research has expanded considerably over the last 30 years and nowadays, it is possible to construct a wide range of liposomes varying in size, phospholipids composition and surface characteristics to suit the specific application for which they are intended. In dermatology, the topical application of liposomes has proven to be of therapeutic value. Liposomes can be used as carriers for hydrophilic as well as lipophilic therapeutic agents because of their amphipathic character. They may improve stabilization of instable drugs by encapsulating them and serve as penetration enhancers facilitating the transport of compounds that otherwise cannot penetrate the skin. Liposomes help in reducing skin irritation by sustaining the release of drugs and by hydration of the epidermis. They also have the potential to target drugs into the pilosebaceous structures and hence they have an additional advantage for treatment of hair follicle-associated disorders. Clinical data indicate that 5-ALA encapsulated in liposomes improves the quality of Fluorescence Diagnosis by ALA-induced Porphyrins (FD) and optimizes the results of Photodynamic Therapy (PDT).