Despite the recent advances in drug development, the majority of novel therapeutics have not been successfully translated into clinical applications. One of the major factors hindering their clinical translation is the lack of a safe, non-immunogenic delivery system with high target specificity upon systemic administration. In this respect, extracellular vesicles (EVs), as natural carriers of bioactive cargo, have emerged as a promising solution and can be further modified to improve their therapeutic efficacy. In this review, we provide an overview of the biogenesis pathways, biochemical features, and isolation methods of EVs with an emphasis on their many intrinsic properties that make them desirable as drug carriers. We then describe in detail the current advances in EV therapeutics, focusing on how EVs can be engineered to achieve improved target specificity, better circulation kinetics, and efficient encapsulation of therapeutic payloads. We also identify the challenges and obstacles ahead for clinical translation and provide an outlook on the future perspective of EV-based therapeutics.