Topotecan (TPT), a potent anticancer camptothecin analog, is well described for the treatment of ovarian cancer, but has also anticancer activity against small-cell and non-small-cell lung cancer, breast cancer, and acute leukemia. Various nanocarriers, including liposomes, have been exploited for targeted delivery of TPT. However, there are a number of challenges with TPT delivery using TPT liposomes (TLs), such as low encapsulation efficiency, physiological pH labile E ring (hydrolysis), accelerated blood clearance, multidrug resistance, and cancer metastases. This review discusses these problems and the means to overcome them, including modification of TLs using zwitterionic poly(carboxybetaine), prolongation in dosing interval (long-term therapy), and modified liposomal encapsulation techniques including active loading methods. We also explore engineered TLs (surface and integral modifications) such as PEGylated TLs, ligand-anchored TLs, and stimuli-sensitive TLs. Further, potential applications, manifestations at the molecular level, patents granted, and preclinical and clinical outlook for TLs are discussed.