The oral delivery of hydrophobic drug presents a major challenge because of the low aqueous solubility of such compounds. Self-emulsifying/microemulsifying drug delivery system (SEDDS/SMEDDS), which are isotropic mixtures of oils, surfactants, solvents and co-solvents/surfactants, can be used for the design of formulations in order to improve the oral absorption of highly lipophilic drug compounds. The efficiency of oral absorption of said drug from such type of formulation depends on many formulation-related parameters, such as surfactant concentration, oil/surfactant ratio, polarity of the emulsion, droplet size and charge, all of which in essence determine the self-emulsification ability. Thus, only very specific pharmaceutical excipient combinations will lead to efficient self-emulsifying systems. With the growing interest in this field, there is an increasing need for guidelines in excipient selection to obtain effective delivery system with improved bioavailability. The aim of this review is to present the recent approaches in selecting the most appropriate lipid system(s); methods for its characterization and role of various excipients for improved delivery of dosage form.