Extracellular vesicles (EVs) are vesicular bodies that bud off from the cell membrane or are secreted virtually by all cell types. Small EVs (sEVs or exosomes) are key mediators of cell-cell communication by delivering their cargo, including proteins, lipids, or RNAs, to the recipient cells where they induce changes in signaling pathways and phenotypic properties. Tangible findings have revealed the pivotal involvement of sEVs in the pathogenesis of various diseases. On the bright side, they are rich sources of biomarkers for diagnosis, prognosis, treatment response, and disease monitoring. sEVs have high stability, biocompatibility, targetability, low toxicity, and are immunogenic in nature. Their intrinsic properties make sEVs an ideal delivery vehicle to be loaded with cargo for therapeutic interventions. Liver diseases are a major global health problem. This review aims to focus on the roles and mechanisms of sEVs in the pathogenesis of liver diseases, liver injury, liver failure, and liver cancer. sEVs are released not only by hepatocytes but also by stromal and immune cells in the microenvironment. Early detection of liver disease determines the chance for curative treatment and high survival of patients. This review focuses on the potential of circulating sEV cargo as specific and sensitive noninvasive biomarkers for the early detection and prognosis of liver diseases. In addition, the therapeutic use of sEVs derived from various cell types is discussed. Although sEVs hold promise for clinical applications, there are still challenges to be overcome by further research to bring utilization of sEVs into clinical practice.