Poor absorption, short half-life and resistance development are some of the major factors responsible for reduced drug efficacy. Lipophilic prodrugs can offer certain advantages to overcome these challenges. Chemical derivatization of hydrophilic agents with lipophilic pro-moieties can significantly elevate drug diffusion across absorptive membranes. Moreover, the desired linkage (ester vs. amide) may be selected to improve stability in vivo. Importantly, an appropriate selection of pro-moiety (targeting ligand) may promote drug specificity and selectivity. In this review article, an attempt has been made to summarize lipophilic prodrugs employed to improve delivery and efficacy of a wide range of poorly permeable but highly potent therapeutic agents. In addition, a brief overview on recent application of lipophilic prodrugs to promote encapsulation of hydrophilic agents in nano-sized drug carriers has been provided.