Extracellular vesicles (EVs) have emerged as key players in intercellular communication, disease pathology, and therapeutic innovation. Initially overlooked as cellular debris, EVs are now recognized as vital mediators of cell-to-cell communication, ferrying a cargo of proteins, nucleic acids, and lipids, providing cellular resilience in response to stresses. This review provides a comprehensive overview of EVs, focusing on their role as biomarkers in disease diagnosis, their functional significance in physiological and pathological processes, and the potential of bioengineering for therapeutic applications. EVs offer a promising avenue for noninvasive disease diagnosis and monitoring, reflecting the physiological state of originating cells. Their diagnostic potential spans a spectrum of diseases, including cancer, cardiovascular disorders, neurodegenerative diseases, and infectious diseases. Moreover, their presence in bodily fluids such as blood, urine, and cerebrospinal fluid enhances their diagnostic utility, presenting advantages over traditional methods. Beyond diagnostics, EVs mediate crucial roles in intercellular communication, facilitating the transfer of bioactive molecules between cells. This communication modulates various physiological processes such as tissue regeneration, immune modulation, and neuronal communication. Dysregulation of EV-mediated communication is implicated in diseases such as cancer, immune disorders, and neurodegenerative diseases, highlighting their therapeutic potential. Bioengineering techniques offer avenues for manipulating EVs for therapeutic applications, from isolation and purification to engineering cargo and targeted delivery systems. These approaches hold promise for developing novel therapeutics tailored to specific diseases, revolutionizing personalized medicine. However, challenges such as standardization, scalability, and regulatory approval need addressing for successful clinical translation. Overall, EVs represent a dynamic frontier in biomedical research with vast potential for diagnostics, therapeutics, and personalized medicine.