Lipid based drug delivery systems have been widely studied and reported over the past decade and offer a useful alternative to other colloidal drug delivery systems. Skin is a popular route of drug delivery for locally and systemically acting drugs and nanoparticles are reported as a potential formulation strategy for dermal delivery. Although the skin acts as a natural physical barrier against penetration of foreign materials, including particulates, opportunities exist for the delivery of therapeutic nanoparticles, especially in diseased and damaged skin and via appendageal routes such as the openings of hair follicles. The extent and ability of nanoparticles to penetrate into the underlying viable tissue is still the subject of debate although recent studies have identified the follicular route as the most likely route of entry; this influences the potential applications of these dosage forms as a drug delivery strategy. This paper reviews present state of art of lipid-based nanocarriers focussing on solid lipid nanoparticles, nanostructured lipid carriers and nanoemulsions, their production methods, potential advantages and applications in dermal drug delivery.