The skin can offer several advantages as a route of drug administration although its barrier nature makes it difficult for most drugs to penetrate into and permeate through it. During the past decades there has been a lot of interest in lipid vesicles as a tool to improve drug topical delivery. Vesicular systems such as liposomes, niosomes, ethosomes and elastic, deformable vesicles provide an alternative for improved skin drug delivery. The function of vesicles as topical delivery systems is controversial with variable effects being reported in relation to the type of vesicles and their composition. In fact, vesicles can act as drug carriers controlling active release; they can provide a localized depot in the skin for dermally active compounds and enhance transdermal drug delivery. A wide variety of lipids and surfactants can be used to prepare vesicles, which are commonly composed of phospholipids (liposomes) or non-ionic surfactants (niosomes). Vesicle composition and preparation method influence their physicochemical properties (size, charge, lamellarity, thermodynamic state, deformability) and therefore their efficacy as drug delivery systems. A review of vesicle value in localizing drugs within the skin at the site of action will be provided with emphasis on their potential mechanism of action.