Liposomes are artificial microscopic vesicles composed of phospholipid bilayers with the ability to encapsulate both hydrophobic and hydrophilic molecules, owing to the amphipathic nature of lipids. Hydrophobic molecules can be stored within the bilayer membrane, while hydrophilic molecules can be embedded in the inner core of liposomes. Encapsulated compounds within liposomes are protected from environmental and chemical alterations, such as enzymatic and chemical modifications, as well as changes against extreme pH, temperature, and ionic strength. Liposomes protective nature highlights their importance as nanocarriers for a wide spectrum of hydrophobic and hydrophilic molecules. This review offers a concise introduction to the fundamental physicochemical properties of liposomes and the various production methods including the role of cholesterol and potential alternatives such as phytosterols. It also provides an up‐to‐date overview of liposomes applications as delivery vehicles in food, cosmetics, and pharmaceuticals.