Exosomes emerge from endosomal invagination and range in size from 30 to 200 nm. Exosomes contain diverse proteins, lipids, and nucleic acids, which can indicate the state of various physiological and pathological processes. Studies have revealed the remarkable clinical potential of exosomes in diagnosing and prognosing multiple diseases, including cancer, cardiovascular disorders, and neurodegenerative conditions. Exosomes also have the potential to be engineered and deliver their cargo to a specific target. However, further advancements are imperative to optimize exosomes’ diagnostic and therapeutic capabilities for practical implementation in clinical settings. This review highlights exosomes’ diagnostic and therapeutic applications, emphasizing their engineering through simple incubation, biological, and click chemistry techniques. Additionally, the loading of therapeutic agents onto exosomes, utilizing passive and active strategies, and exploring hybrid and artificial exosomes are discussed.