Blood transfusion systems have greatly benefited human health and welfare. Nevertheless, some problems remain: infection, blood type mismatching, immunological response, short shelf life, and screening test costs. Blood substitutes have been under development for decades to overcome such problems. Plasma component substitutes have already been established: plasma expanders, electrolytes, and recombinant coagulant factors. Herein, we focus on the development of red blood cell (RBC) substitutes. Side effects hindered early development of cell-free hemoglobin (Hb)-based oxygen carriers (HBOCs) and underscored the physiological importance of the cellular structure of RBCs. Well-designed artificial oxygen carriers that meet requisite criteria are expected to be realized eventually. Encapsulation of Hb is one idea to shield the toxicities of molecular Hbs. However, intrinsic issues of encapsulated Hbs must be resolved: difficulties related to regulating the molecular assembly, and management of its physicochemical and biochemical properties. Hb-vesicles (HbV) are a cellular type of HBOC that overcome these issues. The in vivo safety and efficacy of HbV have been studied extensively. The results illustrate the potential of HbV as a transfusion alternative and promise its use for other clinical applications that remain unattainable using RBC transfusion.