Central nervous system diseases represent a huge world of burden of human suffering with negative economic results. Most therapeutic compounds cannot attain the brain because of the blood-brain barrier and its expression of efflux transporters. Among them, the P-glycoprotein plays a significant role leading to failure of various clinical treatments. A non-invasive strategy to circumvent the blood-brain barrier and P-glycoprotein emphasizes on the encapsulation and therefore masking of therapeutic compounds in drug delivery systems. Up to now, liposomes are the most widely studied drug delivery systems due to their biocompatibility, biodegradability, and less toxicity. The incorporation of polyethylene glycol-lipid derivatives within the bilayer of conventional liposomes significantly prolongs liposomal cargo half-life by steric stabilization. Interestingly, an increased brain accumulation of liposomal cargo is achieved by coupling targeting moieties on liposomes surface. These targeting moieties such as peptides or monoclonal antibodies recognize the biochemical transport systems at the blood-brain barrier and mediate the transport of liposomes and their cargo across this barrier. Moreover, stimuli-sensitive liposomes are programmed for cargo release when exposed to a particular microenvironment. Hence, this chapter highlights the potential liposomal applications for delivery of therapeutic compounds as well as diagnostic tools or both, in major central nervous system diseases.