Ease of administration and painless approach made oral route the most preferred. Poor oral bioavailability is pronounced with the majority of recent active ingredients because of dissolution rate limited absorption. Failure to attain intended therapeutic effect of the poor water soluble drugs by this route led to development of novel drug delivery systems which will fulfill therapeutic needs with minimum dose. Although many formulation approaches like solid dispersions, complexation, pH modification, and cocrystals exist, lipid based delivery systems finding increased appliance with the apparent increase in absorption of drug. Among lipid based formulations, self-microemulsifying formulations (droplet size < 100 nm) are evident to improve the oral bioavailability of hydrophobic drugs primarily due to their efficiency in facilitating solubilization and in presenting the hydrophobic drug in solubilized form whereby dissolution process can be circumvented. Various components that are used to formulate these dosage forms like surfactants and lipids contribute to the overall improvement in oral bioavailability via promoting the lymphatic transport; thereby hepatic first pass metabolism can be surmounted. The present paper gives exhaustive information on the formulation design and characterization of SMEDDS along with the probable mechanisms by which the bioavailability can be improved with SMEDDS.