Using liposomes to deliver drugs to and through human skin is controversial, as their function varies with type and composition. Thus they may act as drug carriers controlling release of the medicinal agent. Alternatively, they may provide a localized depot in the skin so minimizing systemic effects or can be used for targeting delivery to skin appendages (hair follicles and sweat glands). Liposomes may also enhance transdermal drug delivery, increasing systemic drug concentrations. With such a multiplicity of functions, it is not surprising that mechanisms of liposomal delivery of therapeutic agents to and through the skin are unclear. Accordingly, this article provides an overview of the modes and mechanisms of action of different vesicles as drug delivery vectors in human skin. Our conclusion is that vesicles, depending on the composition and method of preparation, can vary with respect to size, lamellarity, charge, membrane fluidity or elasticity and drug entrapment. This variability allows for multiple functions ranging from local to transdermal effects. Application to dissimilar skins (animal or human) via diverse protocols may reveal different mechanisms of action with possible vesicle skin penetration reaching different depths, from surface assimilation to (rarely) the viable tissue and subsequent systemic absorption.